The Hoover Institution’s Foundations of Long-Run Prosperity Working Group, cochaired by Hoover senior fellows Stephen Haber and Amit Seru, held its fall 2023 conference in Istanbul, Turkey, on October 26 and 27, 2023, in partnership with Koç University.

The conference theme centered on challenges faced by middle-income economies. Scholars discussed the reasons why countries reach a middle-income category and fail to achieve greater levels of prosperity. They examined the political and economic institutions that enable countries to achieve middle-income status and whether those institutions can facilitate continued economic growth. Presentations also explored the complexities facing Turkey’s economy and governing institutions.

Istanbul, located on the eastern frontier of Europe and a gateway from the West to the Middle East and Asia, served as an appropriate venue. The Hoover working group’s efforts to host a conference outside the United States underscores its commitment to building relationships with academic centers worldwide and fostering exchanges of ideas across borders on how to best advance prosperity.

The conference, Challenges of Middle-Income Economies, covered the following topics:

Governance Crises and Resilience of Competitive Authoritarian Regimes

Ziya Öniş, a professor of international relations at Koç University, presented a paper exploring the dynamics behind President Recep Tayyip Erdoğan's success in the May 2023 Turkish elections, using economist Albert O. Hirschman’s “exit, voice, and loyalty” framework. The paper reveals that despite governance shortcomings, loyalty to the incumbent, particularly among those closely tied to the government, offered tangible benefits to voters. Meanwhile, the opposition’s failure to present a compelling alternative and the appeal of nationalist sentiments contributed to the dominance of Erdoğan's governing block. The paper also raises concerns about the future of Turkish democracy, emphasizing the need for a cohesive opposition.

Getting to the Middle Income

Avidit Acharya, Hoover senior fellow and professor of political science at Stanford University, presented a paper in which he and his colleagues (including Haber) developed a model to explain how selective property rights granted by authoritarian regimes can enable countries to rise from poor to middle-income status. Accordingly, the paper argues that low-income countries that can’t achieve institutionalized property rights protections may still have a feasible path to middle-income status.

The Impact of Trademarks on Economic Outcomes

Mehmet Yörükoğlu, professor of economics at Koç University, presented a paper describing how trademarks influence the US economy. The study draws on detailed firm-level data on trademark registrations, indicating that trademarks not only safeguard the value of companies but also correlate with heightened firm growth and increased marketing activities. According to the paper, a US economy with trademarks experiences greater product variety, improved quality, and enhanced welfare, along with higher concentration of economic activity, compared to a hypothetical scenario of a company without trademarks.

Electoral Cycles, Investment, and Institutional Constraints in Developing Democracies

Brandice Canes-Wrone, the Maurice R. Greenberg Senior Fellow at the Hoover Institution, presented a paper investigating the correlation between policy uncertainty and reduced private investment in democracies. In this study, which encompasses data from 57 developing democracies, Canes-Wrone and her colleagues explain three findings that emerge. First on average, private fixed investment decreases during elections. Second, the effect of that decline varies according to institutional constraints; as constraints increase, the electoral cycle becomes less pronounced, including in specifications that account for the potential endogeneity of the institutions. Third, the effects are larger and more robust in systems with fixed elections.

The State and Industrialization in Turkey Since the Nineteenth Century

Şevket Pamuk, professor of economics and history at Bosporus University, presented a paper assessing state-directed industrialization in Turkey. The analysis emphasizes the importance of capable bureaucracies with autonomy and close ties to the private sector in achieving successful economic outcomes. In the case of Turkey, Pamuk’s findings suggest that success depends less on specific institutions and more on the relations of political and private-sector elites, and more generally on the political economy.

The agenda and papers discussed during the conference can be accessed here.

About the Foundations of Long-Run Prosperity Working Group

Why do prosperous economies develop in some countries and regions while others stagnate? The Working Group on the Foundations of Long-Run Prosperity, chaired by Hoover senior fellows Stephen Haber and Amit Seru, convenes scholars from a broad range of disciplines to research the mechanics of long-run growth. It disseminates the results to the research community, policymakers, and the public. Learn more here.

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