Growth Models and Regime Stability: The Divergent Paths of Malaysia and Turkey in the Global Financial System

Seminar Title: Growth Models and Regime Stability: The Divergent Paths of Malaysia and Turkey in the Global Financial System

Speaker: Assoc. Prof. Fulya Apaydin
 Institut Barcelona d’Estudis Internacionals

Seminar Abstract: 

The global diffusion of financial liberalization reforms has exposed many governments to new market risks, especially in the developing world, with important political implications, most notably after the 2008 Global Financial Crisis (GFC). Departing from this observation, this study examines why some regimes have become more repressive following the GFC, while others have not. Based on a comparison of Turkey and Malaysia, the paper argues that the growth model priorities pursued by these governments play a critical role in why some regimes become repressive or choose democratic opening. In countries like Turkey where domestic consumption and production rely heavily on foreign borrowing, crises that disrupt access to cheap credit often lead to economic upheaval, paving the way to political repression and social inequality. This happened when the ruling coalition sought to control political divisions that threatened their survival, by selectively alleviating economic grievances and thereby maintaining power in the aftermath of a major economic crisis. In contrast, regimes that can shield their economies from global financial shocks—often under a more hybrid growth model thanks to commodity exports or sustained foreign investment—are less prone to political upheaval when consumers and investors have access to affordable loans. In cases like Malaysia where economic growth has been driven by commodity exports and domestic consumption, the government could rely on the surplus to temporarily alleviate economic instability, allowing the ruling coalition to renegotiate growth policy priorities via democratic opening and without resorting to excessive repression.