MIDDLE EAST TECHNICAL UNIVERSITY

Department of Economics Seminar Series 

“Small Industry and the Role of the State in Economic Development: The Turkish Case in the ISI Period (1960-1980)”

by

Seven Ağır

(Middle East Technical University)

Date: March 4, 2024 (Monday)

Time: 14:00

Place: F106, FEAS - Building A

Abstract

This paper examines the role of small industry in the Turkish economy during the Import Substitution Industrialization (ISI) era, spanning from 1960 to 1980. Departing from conventional narratives that overlook the intricate relationships between small industry, large businesses, and the state, this study adopts a comprehensive approach integrating micro-sociological research and macro-historical analysis. It argues that the dynamics between small and large industries were marked by perpetual conflict, leading to a 'missing middle' pattern characterized by the dominance of numerous relatively small firms. Through sector-specific analyses focusing on woodwork and furniture, metalwork and machinery, and textiles, this paper elucidates how varying socio-political conditions shaped the organizational abilities of different actors within these industries. While some small firms managed to transform into business leaders, others remained in subservient roles, particularly in sectors with low barriers to entry like textiles. The study reveals how government policies and foreign ventures influenced the expansion and technological upgrading of small industries, yet also constrained their growth through unequal bargaining power and financial limitations. By shedding light on these dynamics, the paper offers insights into the broader path of Turkish economic development, highlighting implications for the underperformance in investment goods production and trade balance challenges. Overall, this study contributes a nuanced understanding of the complex interplay between small industry, large businesses, and the state during the ISI era, enriching the literature on Turkish economic history and offering avenues for comparative analysis.