Working Paper
The Impact of Financial Liberalization and the Rise of Financial Rents on Income Inequality

The Case of Turkey

This study attempts to investigate and assess the impact of financial liberalization and the ongoing rise of financial rents on income distribution in the post-1980 Turkish economy. Our quantitative investigation of the dynamics of macroeconomic development over this period discloses an overall disassociation of financial institutions from the productive sphere to become the dominant segment of capital manipulating the aggregate domestic economy. Our findings underscore the fact that, given the poor vertical linkages among industrial sectors within the historical conditions of peripheral capitalism, the implementation of vigorous export-promotion polices and state-led price incentives created sporadic increases in productivity in the 1980s, yet failed to generate a sustained increase in economic growth and accumulation.