On June 24, Turkey will hold early voting for its presidential and parliamentary elections. The elections take place amid significant macroeconomic turmoil. Inflation rose by more than 12% year-on-year in May, and the Turkish lira has fallen by nearly 20% against the dollar and euro since the start of the year. International analysts such as Moody’s have significantly reconsidered their growth forecasts. This macroeconomic deterioration follows a general deterioration in the quality of Turkey’s economic and political institutions.
Amid ongoing concerns about the strength of the Turkish economy, what can be said about how the ruling Justice and Development Party (AKP) has managed public resources since coming to power in 2002? Do government spending patterns reflect development and economic needs, or is the way the budget is allocated heavily driven by political priorities?
In a recent paper, we investigate Turkey’s Ministry of Justice and distributive politics under the AKP government, aiming to assess how the ruling party has allocated public funds for distinct development and political purposes. Our findings show that Turkey’s AKP has systematically allocated public funds to provinces for specific strategic reasons, and not simply to address socio-economic concerns.
Turkey’s finances are highly centralized. For example, local government tax revenues accounted for 7.6% of total tax revenues in 2005, almost a quarter of Spain’s, half of Mexico’s, and a third of the OECD average. This strong centralization of finances gives Turkey’s central government the opportunity to control and target public resources beyond the principles of good governance. The AKP is no exception.
Our findings suggest that to maintain its core support, the AKP funneled more excludable goods (goods that can be made inaccessible to non-paying consumers) to its base and directed non-excludable goods (goods that cannot be made inaccessible to non-paying consumers) to provinces where the elections were much closer. That is, the AKP base was subject to significantly higher government spending, while provinces where the AKP’s vote share fell below the party’s national average score received more locally non-excludable and non-reversible goods, such as infrastructure investments. The preferential direction of excludable and reversible goods, such as current expenditures and business subsidies, to the AKP base is evidence of portfolio diversification, where different budget items are utilized for different strategic goals. More specifically, reliably AKP districts saw significantly higher spending on education (the most important current expenditure item, accounting for more than 35% of the total), defense, and, to a lesser extent, culture and religion. Our findings also indicate that security spending has increased in the strongholds of the far-right, especially the ultra-nationalist National Movement Party. This is likely an attempt to win the hearts of voters who are ideologically close to the AKP and who value order and security.
In contrast, all else being equal, the regional bases of the main opposition Republican People’s Party (CHP) were the biggest losers, receiving the least amount of central government spending in most budget subcategories.
Overall, these findings suggest that Turkey’s major political parties deploy spending strategically. First, they aim to shore up their base’s support in areas that involve the distribution of more excludable benefits or that could foster socialization efforts, such as through education curricula. Second, overall, they undermine their arch rival, the CHP, by systematically diverting resources from the CHP’s base. Finally, with regard to a core element of their base, the business community, the AKP concentrates the most excludable types of benefits in areas with more core supporters.
However, in some areas, the party appears to have avoided partisan bias and not instituted punitive measures. In particular, the party appears to have invested relatively fairly in improving the health system, with no evidence of disparities in spending across districts. Consistent with other reports (e.g., here, here, and here), the AKP appears to have maintained the health sector as a forum for demonstrating its commitment to technocratic reform and development priorities.
The question of how governments allocate public resources is crucial for development. From a policy perspective, our findings suggest that some sectors may be less subject to partisan discretionary spending and investment patterns and therefore operate according to a more programmatic logic, leading to more equitable improvements in economic and social outcomes. However, other sectors may be subject to more partisan logics, which could have more negative consequences for equitable and sustainable development.
Once seen as a model of economic and political success for other countries in the MENA region, Turkey’s president and government have come under increasing international scrutiny, with evidence suggesting that the AKP incumbent is using large amounts of central government spending to bolster its electoral support.
