Economic Consequences of Dictatorship and Autocracy – Turkey in a Counterfactual World

Turkey’s republican history has been accompanied by military dictatorship and autocratic rule. The present paper provides the first counterfactual simulation of all four successful military coups in Turkey and investigates the impact of the coups d’état on the GDP per capita trajectory. Three different simulation techniques are utilized, Synthetic Control , Generalized Synthetic Control and Matrix Completion with Nuclear Norm Minimization . Although significant losses of up to 58 percent or USD 2109 per annum are obtained, and an “almost perfect simulation fit” achieved, none of these pass robustness checks, which sheds light on previous simulations with less precision and methodical rigour. In-time , in-space and permutation tests are adjusted with variations in the data set and covariate specifications. Data from the Maddison project, the World Development Indicators by the World Bank and the World Uncertainty Index are utilized. The empirical hypotheses are derived with institutional and historical perspectives. It is argued that the directions of the economic effects, caused by the military coups, depend on four dimensions, i.e., institutional configuration, degree of political instability, occurrence of an uncertainty shock and motives of the junta. Two new concepts are introduced to describe the high level of fragmentation and political instability in Turkey, i.e., Dogma of Singularity and unofficial institutions , which are generalizable to further countries. Contrary to previous literature, all four theoretical dimensions indicate no negative effects of the coups in 1960, 1971, 1980 and 1997 on the Turkish economy. The hypotheses cannot be rejected.