Transformation of the State and Political Economy of the Governance

By the 1980s and 1990s, neoliberal policies such as privatizations and deregulations transforming the minimal state model to regulative state model from the Keynesian social welfare state system made some structural and functional changes in the state mechanism, and the public administration has been in the first place due to the changing relationship between the state and the market. In fact, within this context, the new institutional economics (NIE) had a remarkable influence upon the debates upon the altering role of the state. Hence, the transformation of the state in this regard also revealed the argumentations on the governance paradigm along with the doctrinaire contributions of the new institutional economics. Therefore, this chapter will discuss the transformation of the state and the political economy of the governance together with a critical assessment of the new institutional economics in the public administration.

Transaction Cost Approach to the Outsourcing Decision Problem

Outsourcing has become a management tool that is increasingly involved in the manager's agenda, but the decision to outsource is a problematic issue for decision makers in organizations. Outsourcing provides many benefits but also includes many risks, so every outsourcing agreement does not result in success. This chapter aims to provide a better understanding of the outsourcing problem in light of transaction cost economics. For this purpose, the concept of outsourcing is first explained. The transaction characteristics and the behavioral assumptions of the theory, which play a role in increasing or decreasing transaction costs, are clarified. Finally, governance decision (outsource or not) and some critical issues (safeguarding mechanism against opportunistic behavior by supplier, adaptation, and performance evaluation problem) that will arise after the outsourcing decisions are discussed.

The Political Economy of the Market

In the modern period, there are two concerns regarding the nature of the market. One is associated with market structures that involve solely the economic sphere and exclude all other factors including historical, social, and institutional ones. Hence, it conducts a static analysis, while the other relates the market process with all the aforementioned factors in addition to the economic ones, and therefore, combines economic and non-economic spheres, and the analysis becomes dynamic. This chapter scrutinizes the conceptualization of the market; that is whether the market is considered as a “structure” or a “process”. With this consideration, authors relate the conceptualization of the market with the type of competition. When the market is regarded as a “process”, it is possible to claim that market becomes an “institution”. Thus, by taking the market as an institution and considering competition within a dynamic framework, the emergent economic theoretical structure provides an in-depth, comprehensive, analytical, and novel approach to real economic and social concerns.

Re-Thinking the Role of Institutions in Neoliberalism From New Institutional Economics Perspective

In an attempt to discuss neoliberalism with a reference to new institutional economics, this chapter problematizes the role of formal institutions in the neoliberal age by focusing on a specific type of formal institution, namely property rights in developing countries. New institutional economics (NIE) argues that secure property rights are important as they guarantee investments and thus, promote economic growth. This chapter discusses why the protection of property rights is weak and ineffective in certain developing countries despite their endorsement of neoliberalism by shedding light on the link between the institutional structure of the state and neoliberalism in the developing world. With the political economy perspective, the chapter aims to build a bridge between NIE and political economy, and thereby providing fertile ground for the advancement of NIE.

Institutional Economics

Since the mid-19th century, the thinkers of historical school challenged the deductive, abstractive, and decisive methods of neo-classical economics. According to historical school, social terms have been changed within space and time. Therefore, they defended that the economic theories could not be universal but could only be relative. Instead of professing laws with universal validity, it is more important to reveal the changing structure of society with the extensive studies of economic history. The inductive method of German historical school brought a new perspective into economic theory with theorems such as to consider society as an organism beyond the individuals who would only seek their benefits and the necessity of historical followings in the economic events. From this point of view, it is possible to observe the traces of historical school in the old institutional economics literature.

New Public Administration Understanding and Reform Effects as Products of Neolibal Management Concept

Globalization has been a process that has deeply and continuously influenced societies and states in the late period of historical development. With neoliberalism, the ideological thought system of the process, all social organizations, especially state apparatus and public administrations, are affected by this process and continue to be affected. This transformation process, supported by its international organizations, has led to the preparation and implementation of reforms in order to adopt a new approach to public administration. This change in public administration has affected both public service understanding and public service delivery. It is a process that aims to provide the citizens/customers satisfaction by offering a faster, more efficient, and high-quality public service along with the new public management understanding. Current practices are questioned and improvements are tried.

Structural Shifts and Patterns in Turkey's Foreign Trade

Foreign trade has been a principal tool of the economic policies implemented in Turkey since the foundation of the Republic in 1923. In parallel with the significant developments in the national and global economies, several structural transformations occurred in foreign trade patterns and policies of Turkey. Political approaches varied from strictly protectionist trade regimes to semi-open models and free trade regimes. Previously implemented protectionist trade policies were abandoned in the 1980s for the current open economic policy based on export-led growth model. All these facts led to drastic changes in the composition of goods subject to both Turkey's exports and imports. This chapter examines the fundamental shifts and changes in Turkey's foreign trade by reviewing historical developments, and specifies the existing structural problems in Turkey's foreign trade by analyzing detailed trade data.

The Effect of Democratization and Economic Freedom on Economic Growth

This chapter examines the impact of democratization and economic freedom on economic growth. For this purpose, according to the classification issued by the World Bank, three groups of countries, developed, developing, and underdeveloped, were included in the study. The impact of democratization and economic freedom on economic growth was tested by panel data analysis in the period of 1995-2012. As a result of the analysis, the relationship between democracy-economic freedom and economic growth has been different according to country groups. While there was a positive relationship between economic growth and democracy-economic freedom in developed and underdeveloped countries, a negative relationship was found in the developing country group.

Social and Economic Transformation With the Institutional Economic Perspective

The events and phenomena in the period of the industrial society were explained within the context of the Newtonian paradigm. In today's information society and its economic structure, they are explained within the context of the Quantum paradigm. Nevertheless, the assumption of neoclassics claims that consumers decide independently from each other, which is controversial. Consumers decide in real terms, not independently but under the influence of psychological situation, social environment, and cultural infrastructure. The basic mutual point between the two paradigms is to maximize the benefit from the goods to be consumed when making consumption decisions. To this end, the process of social and economic transformation will first be discussed in the light of paradigm shift and technological improvements. Then, with the institutional economic perspective, the change in consumption understanding will be taken into consideration in the social and economic structure of today.

Classes and Development

Classes forming the social division of labor have changed with the capitalist mode of production. The inheritance from the feudal system is not suitable for the capitalist system. For this reason, the class structure which is suitable for capitalism over time has taken place in many societies. This transformation has become more difficult, especially in the late capitalist countries. This chapter examines class structures of some late-capitalist countries outside Europe and North America. Latin America, Japan, South Korea, and Turkey have historically been studied before and after periods of capitalism. While some countries have successfully completed and managed to develop their class transformations under difficult conditions, some countries have failed. Along with an unsuccessful transformation, new classes have emerged which have preventive effects on the development target. It is difficult for the countries that cannot make their class structure compatible with the capitalist system and the development target.