The Semi-Formal Sector and the Turkish Political Economy

Abstract

The general dichotomy in developing economies between the ‘formal’ and ‘informal’ economic sectors needs to be refined to account for the ‘semi‐formal’ sector: one whose activities appear to be governed by formal rules and procedures but are, in fact, largely unregulated and unrecorded by the state. Using Turkey as an example of a transitional, developing economy, the paper situates the semi‐formal sector in relation to the other two. Also important to examine is the level of autonomy which the semi‐formal sector enjoys in relation to the state and other economic sectors. Autonomy depends on access to resources, and the use of these resources in pursuit of economic, political, or socio‐cultural agendas. Three comparative lessons can be drawn: 1) despite state endeavors, a sizable portion of seemingly formal economic activities go unreported and unregulated; 2) the semi‐formal sector helps the perpetuation of a mutually beneficial relationship of mutual neglect between state and society; and, 3) the sector's political agendas may best be characterized as one of ‘oppositional pragmatism’.