Mustafa Metin Başbay
Bogazici University, Istanbul, Turkey, Economics, Faculty Member
In order to reverse the economic, political and social malaise caused by 40 years of neoliberalism, the US economy requires substantial reforms in areas ranging from taxation, public spending, and trade relations, to labour market... more
In order to reverse the economic, political and social malaise caused by 40 years of neoliberalism, the US economy requires substantial reforms in areas ranging from taxation, public spending, and trade relations, to labour market regulations, and market concentration. If Biden makes the mistake of trying to turn back to pre-Trump ‘normalcy’ rather than paving the way for a different economic model, Trumpism, broadly construed, will live on with some very dangerous consequences. What American politics require is not a recovery in the strict sense of the word, but radical reform which will transform the American economy towards a more inclusive, egalitarian, and sustainable structure. History teaches us that unless the government acts quickly and radically to respond to the crisis, there will be a political reckoning, which may be uglier than even the last four years of American political life.
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This paper advances the idea that the pandemic has been a seismic event for government economic policies around the world. Even after the pandemic is brought under control, its consequences are likely to have a major long-term impact on... more
This paper advances the idea that the pandemic has been a seismic event for government economic policies around the world. Even after the pandemic is brought under control, its consequences are likely to have a major long-term impact on issues ranging from government fiscal behaviour to international borrowing and trade. Moreover, rising government debt will serve to tilt the economic balance between developed and developing countries in favour of the former due to the fact that developed economies have much wider fiscal flexibility than developing countries. However, in the case of a catastrophic economic downturn in developing countries, such as another lost decade of economic growth, there may be damaging side effects for developed countries as well. Unless developed economies act quickly and boldly to alleviate the debt burden of developing countries, the potential for a total collapse in international finance and trade will substantially increase. This may also lead to a new wave of migration towards developed countries, with significant implications for domestic politics in these countries.
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Countries leading in renewable energy technologies stand to reap significant economic benefits in the near future. In this regard, there is fierce competition between major economies, such as China, the US, the EU, and several others.... more
Countries leading in renewable energy technologies stand to reap significant economic benefits in the near future. In this regard, there is fierce competition between major economies, such as China, the US, the EU, and several others. Furthermore, many countries are dependent on energy imports, which cost them billions of dollars every year, whereas others including the Gulf states, Iran, and Russia are dependent on revenues from energy exports to keep their economies and political systems viable. Moreover, the energy trade is a strategic dimension of international relations. Thus, the growing importance of renewable energy sources may permanently tilt the power balance in the international system by taking away an important geopolitical leverage from some while empowering others. This paper argues that the ongoing transition towards renewable energy has significant implications beyond environmental impacts. Given the importance of fossil fuels in modern economies and the geopolitical balance of power, the transition to renewable will deeply influence economic, political, and geopolitical relations between states.
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This paper first introduces a short discussion of general trends affecting emerging economies, which have emerged during the Covid-19 crisis. It discusses how seven major emerging economies, including China, India, Brazil, Mexico,... more
This paper first introduces a short discussion of general trends affecting emerging economies, which have emerged during the Covid-19 crisis. It discusses how seven major emerging economies, including China, India, Brazil, Mexico, Indonesia, Turkey, and Argentina, have dealt with the Covid-19 crisis so far. It focuses on both public health policies to restrict the spread of the virus and reduce death ratios, and economic policies to mitigate economic consequences and keep businesses afloat. The discussion includes reflections on how growth trajectories of specific economies have been altered by the pandemic and what the global economic hierarchy might look like in the post-pandemic world.
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This paper argues that the Covid-19 crisis will accelerate the major policy transformation already underway in developed economies towards a Keynesian framework. First, it summarises the long-hold discussion between those who supported... more
This paper argues that the Covid-19 crisis will accelerate the major policy transformation already underway in developed economies towards a Keynesian framework. First, it summarises the long-hold discussion between those who supported unregulated free markets and those who believe in the necessity of government intervention and regulation. Second, it introduces the theoretical bases for the argument that governments in developed economies should intervene in their economies to keep them healthy in the current situation. Third, it discusses the spending packages proposed in the US, the UK and Eurozone based on what we know about them so far. It concludes that the new Keynesianism is likely to live on and bring about what it promises.
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This paper introduces the recent history of the Turkish economy, and explains the main dynamics that led to high-income growth since the early 2000s. Secondly, it describes the nature of change in the government’s approach to the economy... more
This paper introduces the recent history of the Turkish economy, and explains the main dynamics that led to high-income growth since the early 2000s. Secondly, it describes the nature of change in the government’s approach to the economy and explains why government interventionism, including trade regulations, is required for changing the sectoral composition of production towards more sophisticated, high-value-added industries. Finally, it reflects on how trade regulations should be applied and the missteps that should be avoided on the ground. This paper concludes that the deep transformations caused by the Covid-19 crisis provide developing countries like Turkey with more space and flexibility for policymaking. This enables Turkey to take bold steps in realising its ambitions. Overall, this is a positive development, but it should be well-designed to reap the maximum benefits.
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This paper critically discusses the rescue packages introduced by governments to counteract the economic consequences of the Covid-19 pandemic and explore the potential pathways governments can take in the near future in order to trigger... more
This paper critically discusses the rescue packages introduced by governments to counteract the economic consequences of the Covid-19 pandemic and explore the potential pathways governments can take in the near future in order to trigger sustainable and inclusive recovery. It concludes that in the likely event that the pandemic continues for a prolonged period, governments will have to come up with unconventional solutions beyond pumping liquidity or boosting demand in the short run. This may include a stateled reorganisation of the entire economy. While being a major challenge, on par with war-time economic efforts, this may also be an opportunity to transform economies towards a more favourable model.
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While the world economy is bracing for a profound crisis due to the coronavirus pandemic, an important discussion has started on how the pandemic may transform the world economic order in its aftermath. This paper argues that the pandemic... more
While the world economy is bracing for a profound crisis due to the coronavirus pandemic, an important discussion has started on how the pandemic may transform the world economic order in its aftermath. This paper argues that the pandemic may lead to a major paradigm shift in economic thinking. In times of crisis, governments necessarily claim more control and responsibility over the socio-economic order. Residuals of such government activism are likely to remain as will the impact of the pandemic on the economy. More interventionist, proactive governments may replace the minimalist, neoliberal governments that have dominated the post-1980 world. In many ways, this represents restoring the welfare state and a return to the post-war Keynesian consensus in policymaking. Another likely consequence is a retreat from the hyper-globalisation of the recent decades. In the context of developing countries, this implies that developmentalism and industrialisation policies may once again become the norm.
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This paper provides a short introduction to the heated debate over the economics of climate change. It discusses the main economic trends in the modern age which contributed to the emergence of an environmental crisis. Second, it... more
This paper provides a short introduction to the heated debate over the economics of climate change. It discusses the main economic trends in the modern age which contributed to the emergence of an environmental crisis. Second, it investigates the economic implications of increasing environmental degradation, which involves an analysis of the asymmetric effects of climate change on developed and developing countries. Lastly, some solutions proposed by professional economists are examined. Taking the claim that climate change mitigation remains within the realm of possibility as a basis, an argument is advanced regarding the profound changes the economic system must undergo in order to avert disaster. Ironically, the modern world’s great dynamism and capacity for change, which led to the current crisis in the first place, may be the most important advantage humanity has in this battle. However, successful mobilization of this power first requires a reformation in the international political economy.
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This paper seeks to address the reasons why the world economy may be headed towards a synchronised recession in the near future and why governments and central banks, particularly in developed countries, are not ready for it. This rests... more
This paper seeks to address the reasons why the world economy may be headed towards a synchronised recession in the near future and why governments and central banks, particularly in developed countries, are not ready for it. This rests on the claim that most developed countries seem to have exhausted the traditional channels through which they can mitigate the consequences of a potential recession. Governments and central banks have not been able to reverse the expansionary policies they adopted during the 2008 global financial crisis. Interest rates have remained very low in many major economies while public debt has reached unprecedented levels globally. So, unlike the 2008 crisis, governments and central banks do not have proper fiscal and monetary arsenals at their disposal, which countries normally use to fight recessions. Therefore, the global economy may be facing a potential deadlock, which, according to some economists, will lead to a deep paradigm shift in policy making.
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This paper discusses the ongoing trade war between China and the US, the economic and political dynamics which led to this confrontation, and the respective positions of the two countries. It makes the case that economic tension between... more
This paper discusses the ongoing trade war between China and the US, the economic and political dynamics which led to this confrontation, and the respective positions of the two countries. It makes the case that economic tension between the two countries is unlikely to be resolved any time soon. Furthermore, if left unresolved current tensions have the potential to balloon into a full-scale economic war with global implications. This is because the economic confrontation between the world’s two largest economies is not an issue of agency but of structure, in the sense that trends in global politics and economic relations are driving the two countries towards a conflict regardless of who is in power. This current trend has the potential to determine whether the 21st century will be another American century or one dominated by China’s vision for the future.
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In the last two decades, Turkey has experienced a successful growth performance. However, as the benefits of neoliberal restructuring has been exhausted and Turkey’s sectoral transformation from agriculture to manufacturing mostly... more
In the last two decades, Turkey has experienced a successful growth performance. However, as the benefits of neoliberal restructuring has been exhausted and Turkey’s sectoral transformation from agriculture to manufacturing mostly completed, Turkey now needs to embark on a new path of reformation in order to overcome middle-income trap and maintain its high growth trajectory. Following the example of East Asian growth miracles, Turkey should formulate its own Industrial Policy and use selective government interventions rather than a 'hands-off' approach in the economy. In that respect, a paradigm shift in policy-making in favour of more government activism in the economy is already visible. Proactive policies to protect and support a number of carefully-selected strategic sectors have a central role in this endeavour. Export-oriented sectors should be pushed forward in the economic agenda, and growth should depend more on sophisticated, high-value-added, high-tech production, a task to which the current government seems to have already committed. In the process, the Turkish economy can improve its productivity levels and transition to the high stage of economic development.
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It is natural that immigration, just like any other change, disadvantages some segments of the society. And, the risks and costs of immigration are not negligible. However, immigration is also an opportunity for the domestic countries as... more
It is natural that immigration, just like any other change, disadvantages some segments of the society. And, the risks and costs of immigration are not negligible. However, immigration is also an opportunity for the domestic countries as it contributes a young and vibrant community to the society. It creates better job opportunities for the natives while helping economies grow. Turkey, as an economically rich and politically stable country, will continue to be a magnet for people flowing from its poor, war-torn, or authoritarian neighbours and even countries as far as in Africa. Turkey should make the best of it. It is by no chance that so many successful examples of economic growth in the history went hand in hand with a stable and long-term influx of migrants. The overall effect of immigration depends on having the proper institutional framework on the ground to facilitate smooth integration. Government has to formulate policies and create the legal basis for educating, employing, and culturally incorporating the immigrants. This will benefit the migrants and natives alike."
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This paper seeks to contextualize the political and economic crisis in Venezuela by exploring various root causes and perspectives. Beyond the headlines, it grounds understanding of the core issues in a broader economic and geopolitical... more
This paper seeks to contextualize the political and economic crisis in Venezuela by exploring various root causes and perspectives. Beyond the headlines, it grounds understanding of the core issues in a broader economic and geopolitical context by framing the crisis in terms of the so-called ‘resource curse’ economic paradigm and the long history of US interventionism in the region. Finally, it argues that in order to protect the integrity of the rules-based international order, it is imperative for the international community to reject foreign political intervention and uphold the sovereignty of the Venezuelan people.
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Dramatic shifts in Western politics can only be understood within a wider perspective of a changing power balance between the poor and the rich in recent decades. Rising populism is largely driven by this deepening sense of losing power... more
Dramatic shifts in Western politics can only be understood within a wider perspective of a changing power balance between the poor and the rich in recent decades. Rising populism is largely driven by this deepening sense of losing power and economic security. Political action is motivated by these dynamics and it challenges the prevailing economic paradigm. Western economies need a structural transformation in the way established economic order is functioning. The situation calls for an abolition of neo-liberal policies and the establishment of a new social contract, one that is based on a more collective mentality.
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This discussion papers summarises the discussion of whether manufacturing has lost its significance for economic development in favour of knowledge-based services. A case analysis of Turkey is provided in a separate section. Turkey is a... more
This discussion papers summarises the discussion of whether manufacturing has lost its significance for economic development in favour of knowledge-based services. A case analysis of Turkey is provided in a separate section. Turkey is a revealing example in the sense that both services and manufacturing sectors played a crucial role in its economic growth. Furthermore, there is an ongoing discussion about whether Turkey is overly dependent on construction and serviceled sectors while its manufacturing sector has not developed enough to spur productivity and create more jobs for its young population in recent decades.
This paper investigates what a potential BRICS membership might economically mean for Turkey in the light of the recent crisis in Turkey-USA relations. It concludes that even though Turkey may benefit a lot from substantial economic ties... more
This paper investigates what a potential BRICS membership might economically mean for Turkey in the light of the recent crisis in Turkey-USA relations. It concludes that even though Turkey may benefit a lot from substantial economic ties with the BRICS, it is an unlikely substitute for Turkey’s well-established relations with the West. Turkey’s link with the BRICS should not be about replacing its ties with the West but further strengthening them by improving Turkey’s power and importance in the global governance via alternative alliances.
2020: The Year Ahead focuses on twelve key events and flashpoints across the globe to watch out for as the year unfolds. The report focuses on themes and hotspots that are likely to feature in the news cycle more frequently than others.... more
2020: The Year Ahead focuses on twelve key events and flashpoints across the globe to watch out for as the year unfolds. The report focuses on themes and hotspots that are likely to feature in the news cycle more frequently than others. For instance, Iraq, Lebanon, and Algeria will continue to experience political, economic and social upheaval as they move through their respective political transitions. Similarly, developments in the Eastern Mediterranean, Saudi Arabia, Kashmir, the Sahel Region, as well as other issues, will be examined and analysed with forecasts provided regarding their potential trajectories.
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This report provides a look ahead at 2019, focusing on what TRT World Research Centre researchers believe will be some of the most significant issues facing the world. From the continued aftermath of the killing of Jamal Khashoggi, the... more
This report provides a look ahead at 2019, focusing on what TRT World Research Centre researchers believe will be some of the most significant issues facing the world. From the continued aftermath of the killing of Jamal Khashoggi, the war in Yemen and a decisive year for Turkey, to Brexit and the ongoing trade dispute between China and the US, our researchers offer their engaging and insightful analysis of the year to come in world affairs. The report looks ahead to major developments in Turkey, the MENA region, Asia, Europe, Africa and the United States, putting them in context and analysing their possible impacts in light of ongoing shifts in the global order.
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This study investigates if and how the economic growth effects of fiscal policy depend on the stage of development. In particular, it analyses the effects of different fiscal policy compositions (i.e. taxes on income and consumption,... more
This study investigates if and how the economic growth effects of fiscal policy depend on the stage of development. In particular, it analyses the effects of different fiscal policy compositions (i.e. taxes on income and consumption, public spending on investments and consumption, and different modes of redistribution) on long-term growth and how these effects systematically change in countries with different levels of capital stock, population growth, capital market conditions, distance to technological frontier, etc., most of which can reasonably be captured by a country's stage of development. The study includes the claim that different theoretical paradigms better guide us in the analyses of fiscal policy at different stages of development; namely, developing countries fit better to the assumptions of the Classical theory, whereas developed country conditions are better explained in the Keynesian theory. The main argument can be summarised as follows: in developing countries, where the capital-labour ratio is very low and most productivity growth comes from capital formation, capital accumulation is the key mechanism for accelerating growth. In these economies, fiscal policies aiming to maximise savings are more supportive of growth as this raises investible funds for capital accumulation (Lewis, 1954). Developed countries, where the capital-labour ratio is high, however, are usually adversely impacted by a savings glut (Hansen, 1939). In these economies, savings capacity often far exceeds investment demand due to capital saturation, so fiscal policies designed to support effective demand are more effective in driving investments and thus growth. Furthermore, in developing countries, where investment demand is high but access to credit is limited, accumulation of resources by the capitalist class tends to have trickle-down effects, whereas in developed countries, where investment demand is low and capital markets are advanced, it contributes to the savings glut more than investments. Therefore, in developing [...]
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2020: The Year Ahead focuses on twelve key events and flashpoints across the globe to watch out for as the year unfolds. The report focuses on themes and hotspots that are likely to feature in the news cycle more frequently than others.... more
2020: The Year Ahead focuses on twelve key events and flashpoints across the globe to watch out for as the year unfolds. The report focuses on themes and hotspots that are likely to feature in the news cycle more frequently than others. For instance, Iraq, Lebanon, and Algeria will continue to experience political, economic and social upheaval as they move through their respective political transitions. Similarly, developments in the Eastern Mediterranean, Saudi Arabia, Kashmir, the Sahel Region, as well as other issues, will be examined and analysed with forecasts provided regarding their potential trajectories.
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The 15th summit of the G20 will be hosted by Saudi Arabia on November 21st and 22nd. Many expect the summit to lead to historic decisions with regards to the fight against Covid-19. The G20 is expected to play an important role in... more
The 15th summit of the G20 will be hosted by Saudi Arabia on November 21st and 22nd. Many expect the summit to lead to historic decisions with regards to the fight against Covid-19. The G20 is expected to play an important role in confronting the global economic crisis, take steps towards restructuring developing country debts, and coordinate member responses to the Covid-19 pandemic. The Covid-19 pandemic, as a once-in-a-lifetime crisis that has impacted the entire world, represents the ultimate test for the G20.
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Prior to the Covid-19 crisis, most analysts were confident that President Trump would win a second term in office. At the end of the longest-ever economic expansion in American history, the unemployment rate was at a historic low. With... more
Prior to the Covid-19 crisis, most analysts were confident that President Trump would win a second term in office. At the end of the longest-ever economic expansion in American history, the unemployment rate was at a historic low. With Covid-19, however, things have quickly and dramatically changed. Many blame President Trump for downplaying the pandemic and calling for the economy to reopen too early, a move that has been interpreted as a cynical ploy to minimise the economic toll in order to increase his chances of re-election. Now, he is the underdog in the lead up to the election and seems to be aggravating the trade war with China, in an attempt to boost his popularity. If the economic impact of Covid-19 remains short-lived and the American economy quickly returns to some sense of normalcy, President Trump may still be able to recover from his current predicament.
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As the world continues to deal with the immediate impact of the Covid-19 pandemic, Turkey provides an interesting model for how the outbreak can be handled both domestically and internationally. This Policy Outlook examines various facets... more
As the world continues to deal with the immediate impact of the Covid-19 pandemic, Turkey provides an interesting model for how the outbreak can be handled both domestically and internationally. This Policy Outlook examines various facets of Turkey’s response to the pandemic, including: mitigation efforts, economic stimulus and the resiliency of the country’s national healthcare system. Turkey’s active diplomacy in the time of the coronavirus is contextualised within the country’s general foreign policy outlook that prioritises humanitarian diplomacy and multilateral cooperation. Furthermore, Turkey’s long-term preparedness is discussed along with potential openings for Turkish industry as discussions about supply chains and vaccines heat up.
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This paper first discusses the impact of the coronavirus outbreak on the US economy thus far and provides a trajectory about what to expect in terms of economic damage in the short to medium term. It then discusses American policy-makers’... more
This paper first discusses the impact of the coronavirus outbreak on the US economy thus far and provides a trajectory about what to expect in terms of economic damage in the short to medium term. It then discusses American policy-makers’ response to the ongoing crisis via monetary and fiscal channels, which aims to mitigate the economic consequences. Finally, it discusses the global ramifications of the Coronavirus Outbreak. The paper concludes that most of the economic damage can be short-lived and global economy will probably bounce back towards the end of this year, but country-level effect depends on governments’ effectiveness in suppressing the spread of the disease and use of measures to support the economy in the meantime.
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It has been less than a month since the world learned about the Novel Coronavirus outbreak in China. So far, the disease has taken almost 500 lives, infected more than 20,000 and spread to many other countries. In addition to the human... more
It has been less than a month since the world learned about the Novel Coronavirus outbreak in China. So far, the disease has taken almost 500 lives, infected more than 20,000 and spread to many other countries. In addition to the human and social costs, the Chinese economy, the world’s second largest, has been hit by the outbreak as well. Consumption has declined, and production is at a standstill. This Policy Outlook discusses the implications of the Novel Coronavirus outbreak for both the Chinese and the global economy. It also reflects on the potential impact on the ongoing trade negotiations between the US and China.
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'The Covid-19 Pandemic: A Global Outlook' is a collection of essays discussing the short and long-term political, social and economic consequences of the pandemic.
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The Covid-19 pandemic has taken the world by surprise, subjecting polities, economies, healthcare systems, and social structures to significant upheavals. The pandemic has caused hundreds of thousands of fatalities and infected millions... more
The Covid-19 pandemic has taken the world by surprise, subjecting polities, economies, healthcare systems, and social structures to significant upheavals. The pandemic has caused hundreds of thousands of fatalities and infected millions of people around the globe. This book is an endeavour to search for meaning through an examination of possible implications of the pandemic from a variety of angles and perspectives.
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In this book, Ahmed Paul Keeler examines the worldview, until comparatively recently unquestioned, of ever continuing human progress. The author directly connects the present ‘Age of Crises’ to an adherence to the myth of progress and... more
In this book, Ahmed Paul Keeler examines the worldview, until comparatively recently unquestioned, of ever continuing human progress. The author directly connects the present ‘Age of Crises’ to an adherence to the myth of progress and the loss of balance in modern life; "the balance between the material and the spiritual, and between ourselves and the environment in which we live". In this thought-provoking book, we are invited to examine the troubles we are experiencing and the tangled relationship between Islam and the West through a distinctive lens.