Crises of Real Sector and Fiscal Policies in Turkey in the Process of Globalization

Abstract

This study examines the crises, which increases in prevalence and spreadsalong with globalization, in terms of the fiscal policies implemented in the Turkish economy. The focus of the study is the impact of Mortgage crises on Turkey and the analysis of the 2018 real sector indicators in terms of the crisis. Globalization has been on the rise since the 19th century. Liberal policies implemented with globalization creates new opportunities in some cases while these policies presents source of threat in some other cases. Economic crises are at the top of this threat. The dependence of the country’s economy on the economies of other countries plays a significant role in the emergence of a crisis. This kind of dependency relation leads crises to spread rapidly to other country/ countries. It was the 24 January Decisions leading to this dependence and contagion for Turkish economy. Liberal policies led to ruleless and limitless flow of global capital specially in the short term and this made Turkish economy vulnerable to some risks. Due to these risks the structural problems of Turkey as the high share of debt interest in the budget, inflation, foreign trade deficit, current account deficit, unemployment etc. have continued. Sometimes in some sectors these structural problems have manifested themselves as a crisis. The crisis arises in the financial and reel sectors. The economic crisis which is the focus of discussions in Turkey today will be analyzed in comparision with the 2008 crisis in terms of real sector. The current situation of the real sector will be revealed. Moreover, it will be discussed that the implemented monetary policies are insufficient and instead fiscal policies are more successful. Thus, it will be seen that in the 21th century the Keynesian policies are on the agenda again. The expected outcome of the study is observation of recession and inflation in the Turkish real sector.