THE POLITICAL ECONOMY OF INCLUSION
Including broad-based change in the political agenda Prototypical reform processes usually start by bringing the reform topic into public debate and onto the political agenda, followed by actions to generate buy-in among stakeholders and build a consensus of approval. This dynamic can be heightened in electoral periods in which political parties must compete with different agendas and lead
BOX 10.2
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debates around their reform topics. A popular and relevant combination of agenda items is crucial for scoring an election victory. One relatively recent example is the landslide win of the Turkish Justice and Development Party (AKP) under Tayyip Erdog˘an in the early 2000s, backed by a broad reformist agenda (box 10.2). Citizen discontent is another frequently used channel for bringing items into the political debate, independent of a country’s
Structural reforms under broad-based politics: Turkey’s Justice and Development Party in the 2000s
Turkey’s fast and equitable growth performance over the past decade is often attributed to the bold reforms and prudent policies implemented by the country’s ruling Justice and Development Party, democratically elected for a third consecutive term in a landslide victory in June 2011. The party’s success in balancing the requisites of macrostability and inclusive growth under its leader, Recep Tayyip Erdog˘an, contains important insights for governments in MENA, as the gains from bringing together diverse collective interests behind a reformist agenda were significant. The traditional support base of the AKP comprised the small- and medium-sized entrepreneurs in the Anatolian heartland. Yet the party’s commitment to macrostability, market-driven development, and the democratization of Turkey also drew endorsement from the well-organized, Istanbulbased big businesses. This enhanced support from employers was instrumental in consolidating structural reforms initiated in the aftermath of Turkey’s fi nancial crisis in 2000–01, including particularly challenging reforms in banking and public fi nancial management. Beyond the big cities, the AKP government has promoted expansion of the economy’s centers of dynamism by establishing regional development agencies, stepping up regional investment supports, and maintaining close relations with attendant business organizations. Benefi ciaries were an array of smaller but rising Anatolian fi rms. Particularly relevant in this regard is the AKP’s broad public appeal. Erdogˇan’s socially conservative
yet solidarity-oriented rhetoric attracted wide segments of Turkish society that had felt excluded by the country’s top-down modernization experiment led by secular elites. Building on this popular momentum, AKP leaders emphasized social justice and inclusive growth. At the local level, AKP-run municipalities implemented social aid programs, at times relying on the party’s extensive grassroots organization. This strategy was complemented at the national level by increased spending on health and education, high agricultural subsidies, and improvements in the quality of public services. A broad electoral coalition also entails policy compromises, as illustrated by Turkey’s enduring labor market challenges. The few changes include a 2003 law that provided a legal context for temporary contracts, the introduction of a modest unemployment insurance scheme, and, more recently, targeted incentives provided to employers’ social security premiums and new programs for vocational training as part of the government’s policy mix to counter the global crisis of 2008–09. On the whole, however, the Erdogˇan government avoided dramatic shifts in labor market arrangements that could upset its social partners. As a result, Turkey’s labor regulations remain relatively rigid, with strict employment protections guaranteed under high severance payments. Minimum wages are also set consistently above regional averages. In addition, despite a mass privatization drive, the number of public employees increased through new recruits, and public salaries were raised in recent years. Currently, the government is fi nalizing a new employment strategy, which has been put together after wide (continued next page)