Review of Radical Political Economics 34 (2002) 335–341 Turkey: bankruptcy of neoliberal policies and the possibility of alternatives Özgür Orhangazi Department of Economics, University of Massachusetts, Amherst, MA 01003, USA Abstract The year 2001 in Turkey has been marked by a destructive economic crisis. This paper argues that the crisis can neither be explained solely by the coincidence of independent events nor by technical problems of economic policies. The increased fragility of the system after the implementation of an IMF-directed “disinflation and stabilization” program paved the way for the collapse of both the program itself and the economy. Insistence on these types of policies will only worsen the conditions, and results of the policies are both economically and socially undesirable. This paper proposes alternative policies and tools, which will provide improvements in growth, employment, and income distribution. © 2002 Published by URPE. JEL classification: E6; E44; F32 Keywords: Financial crisis; IMF; Turkey Until November 2000, Turkey was winning praise from international financial analysts and the International Monetary Fund (IMF) for its stabilization policies. However, after a relatively small financial turmoil in November 2000, 2001 brought the country into the midst of a devastating crisis. The increased fragility of the system after the first year of an IMF-directed “disinflation and stabilization” program has paved the way for the collapse of the economy. The first section highlights the sources of macroeconomic instability in Turkey. The next section analyzes the road to the 2001 financial crisis. Finally, we show that alternative policies and tools are available. 1. Political economy of macroeconomic instability After financial liberalization in 1989, Turkey’s growth performance has been sluggish with a “boom-bust” growth performance with a relatively low average growth rate and high 0486-6134/02/$ – see front matter © 2002 Published by URPE. PII:S0486-6134(02)00175-4