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03 July 2025
PUBLISHED
01 August 2025
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Vol.05 Issue08 2025
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of the creative commons attributes 4.0 License.
Examining the
Compatibility of Economic
Strategies and Real-World
Conditions in the Late
Ottoman Empire
Ahmet Kaya
Department of Economics, Istanbul University, Istanbul, Turkey
Fatma Yilmaz
Faculty of Political Science, Ankara University, Ankara, Turkey
Abstract:
This study explores the relationship between
the economic policies of the late Ottoman Empire and
the functioning of its real economy. Specifically, it
examines whether the political and economic strategies
of the state aligned with the underlying economic
structures and daily activities of the population. The
research investigates key aspects such as fiscal policy,
trade regulation, agricultural production, industrial
development, and the influence of foreign powers in
shaping the economic landscape. Using a combination
of historical documents, economic data, and
comparative analysis, this study aims to assess the
extent to which the policies implemented by the
Ottoman state during its later years were compatible
with its actual economic conditions and the lived
experiences of its citizens.
Keywords:
Ottoman Empire, Political Economy,
Economic Policies, Agricultural Sector, Industrialization,
Foreign Influence, Fiscal Policy, Urban-Rural Divide,
Modernization, Economic Stability.
Introduction:
The late Ottoman Empire (19th century to
the early 20th century) witnessed significant changes in
its political and economic systems. A variety of internal
and external challenges, including military defeats,
territorial losses, the rise of nationalism, and increasing
foreign influence, shaped the empire's economic
policies. The Ottoman state implemented several
economic strategies aimed at modernizing the
economy, particularly in areas such as infrastructure,
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industrialization, and trade.
However, the question arises as to whether these
policies were in tune with the realities of the Ottoman
economy. The "real economy," defined here as the
actual conditions of production, consumption, and
trade within the empire, was often influenced by local
customs, geographical factors, and the limitations of
state power. In this context, the study examines the
tensions and synergies between the political decisions
made by the Ottoman authorities and the economic
realities on the ground.
The main questions this article addresses are:
1.
To what extent did the political economy of
the late Ottoman Empire align with the real economic
practices and structures?
2.
How did key political actions
—
such as fiscal
policies, trade agreements, and infrastructure
projects
—
interact with local economic realities?
3.
What were the broader implications of this
compatibility or lack thereof for the economic stability
and modernization of the empire?
METHODS
This study uses a combination of qualitative and
quantitative research methods. Primary sources
include Ottoman state documents, trade reports, and
financial records from the late 19th and early 20th
centuries. Additionally, a review of the relevant
historical and economic literature on the Ottoman
Empire’s political econo
my is conducted.
1.
Document Analysis: Historical records such as
imperial decrees, taxation laws, and trade agreements
provide
insight
into the
political
strategies
implemented by the Ottoman government. These
documents help to outline the state’s fiscal
policy and
its approach to foreign trade, agriculture, and industry.
2.
Comparative Analysis: The study compares the
official economic policies with data on agricultural
output, industrial growth, and foreign trade. This
allows for an evaluation of whether the policies were
effective in achieving their intended goals or if they
were incompatible with the existing economic
conditions.
3.
Statistical Data: Data from the late Ottoman
period on trade volume, industrial production, and
agricultural output are used to assess the real
economic conditions in relation to political decisions.
4.
Secondary Literature Review: Secondary
sources include scholarly works on Ottoman economic
history, providing a contextual understanding of the
economic challenges and reforms in the late Ottoman
period.
RESULTS
The findings of this study suggest that there was often a
significant gap between the economic policies
implemented by the Ottoman state and the real
conditions of the economy:
1.
Fiscal Policies: The late Ottoman state
attempted to modernize its fiscal system by instituting
reforms, including the establishment of state
monopolies on certain goods, imposing new taxes, and
restructuring debt. However, the real economy,
particularly in rural areas, remained heavily dependent
on traditional agricultural practices and local markets,
which were not always compatible with the centralizing
fiscal policies. These policies often led to economic
instability, especially when taxes were too burdensome
for local producers.
2.
Trade and Foreign Influence: The Ottoman
government signed numerous trade agreements with
European powers, such as the Capitulations, which
granted foreign merchants favorable conditions in
exchange for economic concessions. These agreements
led to the increased dominance of foreign imports and
an outflow of precious metals, which hindered domestic
industrial growth. While the Ottoman state sought to
modernize trade networks, its reliance on foreign
powers weakened its control over the economy.
3.
Agricultural Sector: The Ottoman economy was
largely agrarian, with most of the population engaged in
subsistence farming. The state’s attempts to introduce
modern agricultural techniques and increase exports
were often thwarted by a lack of infrastructure and
resistance from local farmers who were unwilling or
unable to adopt new methods. As a result, agricultural
policies did not always align with the realities of local
economies.
4.
Industrialization Efforts: The late Ottoman
Empire sought to modernize its economy by promoting
industrialization, especially in textiles, mining, and
manufacturing. However, the lack of capital, skilled
labor, and technological advancements made industrial
growth slow and uneven. While some industries were
established in urban centers, rural areas remained
largely unaffected by industrialization.
5.
Infrastructure Development: Efforts to build
railroads and improve transportation networks were a
key part of the late Ottoman economic policy. While
railroads did increase connectivity and facilitate trade,
the high costs of construction and foreign financing
meant that the benefits of these projects were often
limited to certain regions, particularly those that were
already economically developed.
DISCUSSION
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The findings of this study suggest that the economic
policies of the late Ottoman Empire were often
misaligned with the real economy of the time. The
Ottoman state’s attempts to modernize the economy
were impeded by several factors, including entrenched
traditional
economic
practices,
the
empir
e’s
dependency on foreign powers, and its inability to
generate
sufficient
capital
or
technological
advancements.
1.
Structural Challenges: The Ottoman Empire’s
vast geographic expanse and diverse population posed
significant challenges for economic integration. The
rural economy, which relied heavily on traditional
farming methods and local markets, was resistant to
the top-down policies implemented by the state. The
centralization of economic control often clashed with
the decentralized nature of local economies, leading to
inefficiencies and economic dissatisfaction.
2.
Dependency on Foreign Powers: The reliance
on foreign trade agreements and foreign capital made
the Ottoman economy vulnerable to external
influence. While the state sought to modernize the
economy, its dependency on European countries for
trade and financial assistance limited its ability to
achieve
true
economic
independence.
The
Capitulations, for example, while beneficial to foreign
traders, restricted the Ottoman Empire’s sovereignty
over its own economy and exacerbated its economic
imbalances.
3.
Failure of Industrialization: Although the
Ottoman Empire sought to industrialize, its efforts
were hampered by a lack of investment in
technological innovation, a shortage of skilled labor,
and a poorly developed infrastructure. This led to slow
progress in industrial development and created a
disconnect between the state’s goals and the real
conditions of the economy.
4.
Agricultural Challenges: The Ottoman Empire’s
agricultural policies, aimed at boosting production and
export, did not take into account the limitations of
local farming practices or the reluctance of peasants to
adopt new methods. As a result, the policies failed to
transform the agricultural sector in a meaningful way,
and the rural economy continued to be dominated by
traditional practices.
5.
Infrastructural
Developments:
While
infrastructure development was a key component of
the empire’s modernization efforts, the uneven
distribution of railroads and other infrastructure
projects meant that many regions, particularly rural
areas, did not benefit from these advancements. This
exacerbated regional disparities and limited the
effectiveness of state policies.
CONCLUSION
The analysis of the late Ottoman Empire's economic
policies in relation to the real economy reveals
significant mismatches that ultimately hindered the
empire's ability to modernize and sustain economic
stability. Despite ambitious efforts by the Ottoman
government to introduce reforms, the policies often
failed to align with the complex and localized realities of
the empire’s diverse population.
One of the primary issues was the centralized nature of
policy-making versus the decentralized structure of the
economy. While the government attempted to control
economic activities through taxes, tariffs, and
monopolies, local economies
—
particularly in rural
areas
—
remained largely unaltered by these central
directives. Traditional agricultural practices, reliance on
local markets, and resistance to change among the rural
population meant that the government’s policies often
had limited reach and effectiveness. The rural sector,
which formed the backbone of the Ottoman economy,
continued to operate outside the purview of modern
fiscal policies, creating a dissonance between
governmental goals and economic realities.
The reliance on foreign powers further deepened this
divide. Through trade agreements like the Capitulations,
the Ottoman Empire granted foreign merchants special
privileges, which, while providing short-term financial
benefits, ultimately undermined domestic industries
and left the economy vulnerable to external pressures.
The trade deals allowed foreign goods to flood Ottoman
markets, often at the expense of local manufacturers
and producers, leaving the Ottoman Empire more
dependent on European powers and less able to
develop an independent, robust economy. In this sense,
Ottoman policies that aimed at encouraging trade and
economic growth were often overshadowed by the
empire's unequal position in international trade.
Additionally, industrialization efforts, which were meant
to modernize the Ottoman economy, fell short due to a
lack of capital, technological know-how, and skilled
labor. The Ottoman leadership sought to develop
industries in sectors like textiles, mining, and
manufacturing, but due to systemic issues such as
limited infrastructure and insufficient investment, these
initiatives made slow progress. The gap between the
political ideal of industrial modernization and the real
conditions on the ground
—
a shortage of resources and
technical expertise
—
was one of the key factors that
prevented successful industrial development in the
empire.
Furthermore, while infrastructure development,
particularly the construction of railroads, was another
key strategy for modernization, the uneven distribution
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of infrastructure development across the empire led to
regional
disparities.
Infrastructure
projects
concentrated in urban centers and strategic areas
often did not reach rural communities, exacerbating
the urban-rural divide and reinforcing regional
inequalities. This lack of equitable development
hindered the integration of the empire’s economic
system and failed to provide the broader population
with the benefits of modernization.
In light of these findings, it is evident that the economic
policies of the late Ottoman Empire were largely
incompatible with the structural realities of the
empire’s economy. While reformers within the
Ottoman government sought to modernize the empire
and bring it in line with Western economic standards,
their efforts were frequently thwarted by the empire's
entrenched agricultural base, limited industrial
capacity, and dependence on foreign powers.
Furthermore, the centralization of economic policy-
making was in direct contrast to the decentralized,
local nature of the Ottoman economy. This mismatch
not only undermined the effectiveness of the policies
but also exacerbated the empire’s internal
contradictions, ultimately contributing to its economic
instability in the early 20th century.
The failure to synchronize political and economic
strategies highlights a key challenge for any state trying
to modernize: policies that ignore local realities and
over-rely on external support can lead to long-term
economic fragility. For the Ottoman Empire, the gap
between the state’s vision for
economic modernity and
the reality of its diverse, complex economy created a
series of barriers to sustainable growth and prosperity.
These contradictions would continue to shape the
Ottoman Empire’s economic legacy, influencing the
early years of the Turkish Republic and beyond.
Future research might focus on how specific policies,
such as the Capitulations or industrial initiatives,
played out at the local level, as well as examining the
role of social structures in shaping economic
outcomes. Understanding the dynamic between
political authority and the real economy can provide
valuable lessons for modern nations facing similar
challenges of development, globalization, and internal
disparities. The Ottoman experience underscores the
importance of ensuring that political decisions are
aligned with the economic and social realities of the
population to achieve sustainable progress.
The study concludes that the late Ottoman Empire’s
economic policies were largely incompatible with the
real economic conditions on the ground. While the
state attempted to modernize the economy through
fiscal reforms, trade agreements, industrialization
efforts, and infrastructure development, these policies
often failed to account for the realities of local
economies and social structures. The reliance on foreign
powers and the empire's inability to fully integrate its
rural and urban economies contributed to the economic
instability that marked the late Ottoman period. In light
of these findings, it is clear that the empire's political
economy was poorly suited to the needs and conditions
of its diverse population, which ultimately hindered its
ability to achieve sustainable economic development.
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