Study Finds Trade Openness Weakens Limited Government in Turkiye

A new study published in Discover Global Society provides a detailed econometric analysis of the factors shaping limited government in Türkiye between 1996 and 2024. The research, led by Azadeh Amoozegar and colleagues, challenges conventional assumptions by demonstrating that economic integration does not automatically strengthen constitutional constraints on executive power. Instead, the findings reveal a complex interplay between fiscal scale, administrative capacity, and political stability that determines the degree of institutional checks and balances within the Turkish state. This longitudinal investigation offers critical insights into how emerging economies navigate the tension between market liberalization and the preservation of individual liberties through institutional design.

The study measures limited government using a composite index derived from the Varieties of Democracy dataset, specifically focusing on judicial and legislative constraints on the executive. This approach captures the legal and institutional dimensions of state power rather than merely the fiscal size of the public sector. By analyzing annual data over nearly three decades, the researchers employed the autoregressive distributed lag bounds-testing approach to examine both short-term and long-term relationships. This methodological choice allows for the identification of cointegration among variables that may be integrated of different orders, providing a robust framework for understanding dynamic economic and political interactions in a small-sample context.

The empirical results indicate a strong long-run relationship between limited government and its determinants, with approximately 44.3% of short-run deviations from equilibrium corrected within one year. This rapid adjustment mechanism suggests that the Turkish institutional system possesses a degree of resilience, quickly restoring balance after shocks. However, the direction of these adjustments is heavily influenced by specific political and economic variables. The error-correction term highlights that while the system tends to revert to a mean, the level of that mean is determined by structural factors that can shift over time due to policy changes or political transitions.

One of the most striking findings is the negative and statistically significant association between trade openness and limited government. Contrary to classical liberal theories which posit that international competition disciplines state intervention, the data from Türkiye suggests that greater integration into global markets was not accompanied by stronger judicial or legislative constraints. This divergence may reflect the specific historical context of the post-1980 liberalization process, where economic opening occurred alongside significant transformations in executive authority. The results imply that trade liberalization alone is insufficient to guarantee institutional accountability unless it is paired with robust domestic checks and balances.

Public-sector employment also emerged as a significant negative determinant of limited government in the long run. The expansion of the public workforce is associated with increased administrative reach and bureaucratic rigidity, which can erode the principle of limited government by creating permanent fiscal obligations. The study notes that public employment reflects not only the demand for services but also broader political incentives for state expansion. This finding aligns with Public Choice Theory, which argues that bureaucrats and politicians have inherent incentives to maximize budgets and personnel, leading to a state structure that is difficult to downsize once established.

In contrast, political stability was found to have a positive and highly significant relationship with limited government in both the short and long run. Stable political conditions appear to support the predictable functioning of legal institutions and the effective operation of oversight mechanisms. When political environments are stable, there is less pressure for governments to centralize authority or adopt exceptional measures that bypass normal constitutional processes. This suggests that political stability acts as a foundation for institutional continuity, allowing judicial and legislative bodies to maintain their independence and effectively constrain executive power.

The role of public expenditure is more nuanced, with a negative long-run coefficient that is statistically significant only at the 10% level. This weaker association indicates that the mere scale of government spending is less determinative of limited government than the administrative structure and political environment. The composition of expenditure and the transparency of fiscal policies may be more critical factors in maintaining institutional constraints. The study emphasizes that fiscal policy should focus on efficiency and oversight rather than just the total volume of spending to prevent the erosion of limited government principles.

Diagnostic tests, including the CUSUM and CUSUM of Squares, confirmed the stability of the model parameters over the sample period, supporting the reliability of the estimated relationships. The high adjusted R-squared value and significant F-statistic further validate the explanatory power of the model. However, the authors caution that the small sample size limits the statistical power and precludes definitive causal conclusions. The findings should be interpreted as exploratory associations that highlight the multidimensional nature of limited government in Türkiye, where economic, political, and institutional factors interact in complex ways.

The study concludes that strengthening limited government in Türkiye requires a holistic approach that addresses not only fiscal and administrative scale but also judicial independence, legislative oversight, and political stability. Policies aimed at enhancing institutional accountability should prioritize merit-based public employment, transparent fiscal management, and the protection of constitutional safeguards. By understanding the specific determinants of limited government, policymakers can design interventions that promote both economic efficiency and the preservation of individual freedoms in a rapidly changing global landscape.

Subject of Research: Economic and political determinants of limited government in Türkiye

Article Title: Political economic and institutional determinants of limited government in Turkiye

Article References: Amoozegar, A., Akpınar, E. N., Henni, M. D., Bardakçı, H., & Görgün, M. R. (2026). Political economic and institutional determinants of limited government in Turkiye. Discover Global Society, 4(1), Article 279. https://doi.org/10.1007/s44282-026-00638-6

Image Credits: AI Generated

DOI: 10.1007/s44282-026-00638-6

Keywords: Limited Government, Türkiye, Political Stability, Trade Openness, Public Expenditure, Public Sector Employment, Institutional Constraints, ARDL Model, Econometrics, Governance, Political, economic