The impact of financial liberalization and the rise of financial rents on income inequality: the case of Turkey
Author(s)
Date
2004Source Title
Inequality Growth and Poverty in an Era of Liberalization and Globalization
Publisher
Oxford University Press
Language
English
Type
Book ChapterItem Usage Stats
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Abstract
This is the third of five country case studies on income inequality, and investigates the impact of financial liberalization and the rise of financial rents on income inequality in Turkey. The chapter has five sections: Introduction; Indicators of Income Distribution: The Evidence-a broad overview, and evidence on the patterns of income distribution in Turkey over the last three decades; Macroeconomic Adjustment under Financial Liberalization and the Rise of Financial Rents-a discussion of the evolution of functional categories of income that includes an account of the macroeconomic adjustment; The Rising Fiscal Gap and the Role of the State in Regulating the Distributional Structure-a detailed analysis of the rise in public sector deficits and the distributive consequences of the widening fiscal gap; and Concluding Comments and Overall Assessment. Sect. 3 looks at the inherent tensions caused by the macroeconomic disequilibria embodied in the process of integration with world markets under conditions of a poorly supervised banking system and underdeveloped and fragile domestic asset markets; here, it is found to be analytically convenient to decompose the path of Turkish liberalization after 1980 into two major subperiods partitioned by the strategic step of capital account deregulation-which took place in 1989 and was completed by the full integration of the domestic market into global financial markets. This section also studies the patterns of the wage cycle and productivity growth using quantitative filtering techniques, and reports on the disassociation of labour remunerations from the productivity gains in the real sphere of the economy. © United Nations University/World Institute for Development Economics Research (UNU/WIDER) 2004. All rights reserved.
Keywords
Banking systemCapital account deregulation
Capital accounts
Case studies
Deregulation
Domestic asset markets
Financial liberalization
Financial rents
Fiscal gap
Income
Income distribution
Income inequality
Inequality
Integration with world markets
Labour remuneration
Liberalization
Macroeconomic adjustment
Productivity gains
Productivity growth
Public sector deficits
Turkey
Wage cycle