Efficiency of the IMF supported stabilization program in the developing countries the case of Turkey

ABSTRACTThis paper investigates globalization process and the impact of the IMF-supportedstabilisation programmes in developing countries including with the experience ofTurkey in last decades. Stabilization programs are usually implemented in developingcountries that face high inflation, high external debt, unsustainable public sector budgetdeficits and balance of payments problems. The fundamental objective of a stabilizationprogram is to balance aggregate supply and demand in the economy.This studyconcerned with the macroeconomic reforms supported by the IMF in Turkey in 1980sand later. The purpose of the study is to examine these programmes, main policy toolsof them as well as their impact on the Turkish economy. The aim of this study is toanalyze the crisis of the developing countries and of Turkey and their StabilizationPrograms in detail in the context of stabilization theory, with the help of stabilizationexperiences of some countries that implemented similar programs during theirinstability episodes. Starting from the early 1980?s the world economy has entered aperiod characterized by financial globalization, financial globalization is understood asthe integration of a country?s local financial system with international financial marketsand institutions. Integration takes place when liberalized economies experience anincrease in developing country capital movement. However financial crises started tooccur very frequently in the emerging economies which apparently show that they areclosely related to the ongoing financial liberalization process.In this paper, recent financial crises and the policies of the IMF are examined by givingspecial emphasis to the experience of developing countries and of Turkey The recentwave of globalization has generated an intense debate among economists, attractingboth strong supporters and opponents. This paper tries to present a balanced view offinancial globalization, outlining the benefits and risks that globalization entails fordeveloping countries.This paper discusses the benefits and risks that financialglobalization entails for developing countries. Financial globalization can lead to largebenefits, particularly to the development of the financial system. Financialglobalization can also come with crises and contagion. Recent financial crises inemerging markets strongly affected thinking about international architecture.