Policy Package 1. Level the Playing Field and the Opportunity for Human Development in Lagging Areas
recruitment and compensation aimed at cutting identity and economic links with the dominant landed, commercial, and industrial classes, but also from regional entities (Ozbudun 1997). The separation between rulers and ruled was reinforced by the absence of representative systems. The Ottoman Empire did not evolve from feudal pluralism to constitutionalism and representation (via the estates and the corporate autonomy of bodies such as the church, cities, and the guilds) that characterized the rise of European states. Neither centrally nor in the provinces did Istanbul develop representative mechanisms until the last quarter of the nineteenth century (Ozbudun 1997). No substantial progress was achieved during European colonization either. So the economic grievances of marginal areas were neither articulated nor addressed. Colonial tax systems encouraged a neglect of lagging areas. First, they discouraged economic development in marginal areas. Particularly during the classical period (1453 to the 1600s), the Ottoman Empire had very low provincial tax rates compared with Europe and other empires (Karaman 2009). Both taxation and internal security in the Ottoman provinces were delegated to local elites. This presented the central administration with a trade-off in setting tax rates. On the one hand, the center and their delegated authorities shared an interest in maximizing gross tax revenue. On the other, the center was concerned about the power balance between itself and its tax-collecting delegates. So the central administration sometimes capped tax rates in the provinces to limit the power of local elites. This cap also discouraged the development of the tax base because neither the central administration nor the local elites stood to gain from economic growth. The tax ceilings induced, at best, economic neglect of lagging areas and, at worst, inefficient or outright detrimental economic policies. Second, colonial tax systems diverted fiscal resources away from local investments. The Ottoman fiscal system shifted a large share of tax revenues away from the provinces and toward the capital region. The tax receipts that remained with provincial governors were only for security and administration expenses, not local investments. The bias toward police and security spending continued and was reinforced during French and British rule, during which some two-thirds of total expenditure was typically security related (Owen 1992). In catering essentially to the metropolis, colonial management avoided redressing regional inequalities. In addition to diverting taxes, colonial rule diverted actual output. Ottoman governors owed their ultimate allegiance to Istanbul. Their performance was assessed on the basis of whether they catered to the security and consumption needs of the Porte, rather than on their development of the provinces. During European colonization, the colonial states continued to serve as providers of goods to the metropolis. Agriculture focused on export crops, such as wine, cereals, and tobacco. In the
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