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Sovereign Wealth Funds in the Context of Subordinate Financialisation: the Turkey Wealth Fund in a Comparative Perspective

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Sovereign Wealth Funds in the Context of Subordinate Financialisation: the Turkey Wealth Fund in a Comparative Perspective SOVEREIGN WEALTH FUNDS IN THE CONTEXT OF SUBORDINATE FINANCIALISATION: THE TURKEY WEALTH FUND IN A COMPARATIVE PERSPECTIVE A THESIS SUBMITTED TO THE GRADUATE SCHOOL OF SOCIAL SCIENCES OF MIDDLE EAST TECHNICAL UNIVERSITY BY ALİ MERT İPEK IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF SCIENCE IN THE DEPARTMENT OF POLITICAL SCIENCE AND PUBLIC ADMINISTRATION SEPTEMBER 2019 Approval of the Graduate School of Social Sciences Prof. Dr. Yaşar Kondakçı Director I certify that this thesis satisfies all the requirements as a thesis for the degree of Master of Science. Prof. Dr. Ayşe Ayata Head of Department This is to certify that we have read this thesis and that in our opinion it is fully adequate, in scope and quality, as a thesis for the degree of Master of Science. Assoc. Prof. Dr. Galip YalmaN Supervisor Prof. Dr. Ebru Voyvoda (METU,ECON) Assoc. Prof. Dr. Galip YalmaN (METU, ADM) Prof. Dr. Hasibe Şebnem Oğuz (Başkent Üni., SBUİ) ii I hereby declare that all information in this document has been obtained and presented in accordance with academic rules and ethical conduct. I also declare that, as required by these rules and conduct, I have fully cited and referenced all material and results that are not original to this work. Name, Last name: Ali Mert İpek Signature : iii ABSTRACT SOVEREIGN WEALTH FUNDS IN THE CONTEXT OF SUBORDINATE FINANCIALISATION: THE TURKEY WEALTH FUND IN A COMPARATIVE PERSPECTIVE İpek, Ali Mert M.S., Department of Political Science and Public Administration Supervisor : Assoc. Prof. Dr. Galip YalmaN September 2019, 182 pages As state-owned investment institutions, sovereign wealth funds (SWFs) are important actors in today’s global finance. In the last few decades, not only the total number of SWFs around the world increased dramatically, but also the total value of assets under management of SWFs reached considerable levels. Therefore, it is not surprising that there has been a proliferation of studies undertaken by scholars with a quest to make sense of these institutions, especially since the mid-2000s. The great majority of these works, however, fall short of developing a genuine explanatory framework to the extent that they carry certain shortcomings of the mainstream scholarship. In this respect, this thesis aims to overcome these drawbacks in studying SWFs by drawing insights from the critical international political economy tradition. It accounts for the emergence and spread of SWFs in the developing and emerging capitalist economies particularly, and provides a comparative analysis of the Turkey Wealth Fund (TWF). The thesis argues that the raison d'etre of SWFs and their significance could only be understood meaningfully in the context of complex dynamics of the hierarchically- organised world market in contemporary capitalism, and subordinate character of iv financialisation in these countries. In this regard, it concerns the underlying social relations and historical specificity of SWFs in capitalist development to investigate the similarities and varieties among them in the different parts of the world. The thesis also put the TWF under close scrutiny to discuss its place in the political economy of neoliberal transformation and financialisation in Turkey. Keywords: Sovereign Wealth Funds, Globalisation, Financialisation, Neoliberalism, Turkey Wealth Fund. v ÖZ TABİ FİNANSALLAŞMA BAĞLAMINDA ULUSAL VARLIK FONLARI: KARŞILAŞTIRMALI BİR PERSPEKTİFTE TÜRKİYE VARLIK FONU İpek, Ali Mert Yüksek Lisans, Siyaset Bilimi ve Kamu Yönetimi Bölümü Tez Yöneticisi: Doç. Dr. Galip YalmaN Eylül 2019, 182 sayfa Devlet sahipliğinde yönetilen yatırım kuruluşları olarak Ulusal Varlık Fonları (UVF) şüphesiz ki günümüz küresel finansın önemli aktörlerdir. Son birkaç on yıllık dönemde, sadece dünya çapındaki mevcut UVF’lerin sayısı önemli ölçüde artmakla kalmamış, aynı zamanda UVF’lerin idaresi altındaki varlıkların toplam değeri kayda değer düzeylere ulaşmıştır. Bundan dolayıdır ki özellikle 2000’li yılların ortasından itibaren bu kuruluşları anlamlandırmak gayesiyle bilim insanları tarafından yürütülen çalışmaların çoğalması şaşırtıcı değildir. Fakat ortaya konan eserlerin büyük çoğunluğu, ana akım yaklaşımların belli başlı eksikliklerini taşıdıkları ölçüde hakiki bir açıklayıcı çerçeve geliştirmekte yetersiz kalmaktadır. Bu bağlamda, bu tez, eleştirel uluslararası siyasal iktisat anlayışından yararlanarak UVF çalışmalarında ana akım çalışmaların eksiklerini aşmayı hedeflemektedir. Bilhassa gelişmekte olan ve yükselen kapitalist ekonomilerde UVF’lerin ortaya çıkışını ve yaygınlaşmasını açıklamakta, Türkiye Varlık Fonu’nun (TVF) karşılaştırmalı bir analizini sunmaktadır. Bunu yaparken, tez, UVF’lerin günümüz dünyasındaki öneminin ve bu kurumların varoluş sebeplerinin yalnızca modern kapitalizmde hiyerarşik bir biçimde örgütlenmiş dünya pazarının karmaşık dinamikleri ve bahsi geçeN ülkelerdeki vi finansallaşmanın tabi mahiyeti bağlamında manalı bir içimde anlaşılabileceğini öne sürmektedir. Bu bakımdan, tez dünyanın değişik bölgelerinde tesis edilmiş UVF’ler arasındaki farklılıklarının ve benzerliklerinin tahkik edilmesi amacıyla bu kurumların kapitalist gelişmedeki tarihsel özgüllükleri ve temel teşkil eden toplumsal ilişkiler ile ilgilenmektedir. Bunun yanı sıra, çalışma TVF’yi yakından inceleyerek, bu kurumun Türkiye’de finansallaşmanın ve neoliberal dönüşümün siyasal iktisadı içindeki yerini tartışmaktadır. Anahtar Kelimeler: Ulusal Varlık Fonları, Küreselleşme, Finansallaşma, Neoliberalizm, Türkiye Varlık Fonu. vii To my beloved mother viii TABLE OF CONTENTS PLAGIRISM..............................................................................................................iii ABSTRACT .............................................................................................................. iv ÖZ ............................................................................................................................. vi TABLE OF CONTENTS .......................................................................................... ix LIST OF TABLES .................................................................................................... xi LIST OF FIGURES .................................................................................................. xii LIST OF ABBREVIATIONS ................................................................................. xiii CHAPTER 1. INTRODUCTION .................................................................................................. 1 1.1. Research Rationale, Motivation & Contribution ............................................ 1 1.2 Research Questions & Methodology ............................................................... 7 1.2.1. Research Questions ............................................................................................. 7 1.2.2. Research Methodology ........................................................................................ 8 1.3. Structure of Thesis ........................................................................................ 10 2. LITERATURE REVIEW: SOVEREIGN WEALTH FUNDS ............................ 13 2.1. Introduction ................................................................................................... 13 2.2. Definition of SWF and International Regulation .......................................... 14 2.3. Classifications of SWFs ................................................................................ 20 2.4. Different Perspectives on SWFs in Mainstream Scholarship ....................... 27 2.4.1. Liberal Tradition in IPE/IR and the Market-Based Perspectives on SWFs ...... 28 2.4.2. State-CeNtric AccouNts iN IPE/IR aNd DiffereNt INterpretatioNs of SWFs ........ 31 2.5. Critical Assessment of SWF Literature ......................................................... 40 3. POLITICAL ECONOMY OF SOVEREIGN WEALTH FUNDS ...................... 44 ix 3.1. Introduction ................................................................................................... 44 3.2. Overcoming State/Market Dichotomy: Historical Materialist Perspective ... 46 3.3. Reframing Globalisation as Internationalisation of Capital .......................... 52 3.4. The Post-War Capitalism and the Ascendancy of Neoliberalism ................. 57 3.5. Financialisation and Sovereign Wealth Funds .............................................. 63 4. SOVEREIGN WEALTH FUNDS IN A HISTORICAL PERSPECTIVE .......... 71 4.1. Introduction ................................................................................................... 71 4.2. Earlier Examples of SWFs: From 1960s to 1990s ........................................ 72 4.3. 1997-98 Asian Financial Crises and SWFs in the 2000s .............................. 77 4.4. New Wave of SWFs in the 2000s and the Global Financial Crisis ............... 87 5. CRITICAL OBSERVATIONS ON THE TURKEY WEALTH FUND .............. 94 5.1. Introduction ................................................................................................... 94 5.2. Turkey Wealth Fund: What We Know? ........................................................ 95 5.3. Is Turkey Wealth Fund Really a Sovereign Wealth Fund? ......................... 100 5.4 A Brief Historical Background: Neoliberal Financialisation in Turkey ...... 106 5.5. Making Sense of the Establishment of the TWF ......................................... 111 5.6. Is Turkey Drifting Apart from Neoliberalism? ........................................... 122 6. CONCLUSION .................................................................................................
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