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Amme İdaresi Dergisi, Cilt 56, Sayı 4, Aralık 2023, 14-28
Shifting Policies, Changing Lives: The Local Development
and Privatization Nexus in Single-industry Towns
Atahan DEMİRKOL
Abstract: This paper dwells on how single-industry towns (SITs) locally develop and are affected by the
privatization of those dominant sectors. To do so, we attempt to discuss the potential results of local development
and privatization tension in SITs. Typically, SITs are where one dominant industry becomes the leading actor in
the local socioeconomic structure. As a result of the statist planning approach, the SIT policy was implemented in
Türkiye by the Central Governments for years, starting with the Five-Years Industrial Development Plans in 1934
and 1938. In line with these plans, building state-owned firms (SOFs) in specific locations implies fostering local
and regional socioeconomic development while accelerating national industrial progress. Nevertheless, this statist
and well-planned policy to utilize SOFs for SIT formation has shifted over the years. Under the local
socioeconomic influence of an SOF, Erdemir, the city of Karadeniz Ereğli, Türkiye, has been a typical case of SIT
formation. The Turkish Government’s policy to build the iron and steel company in the small coastal town during
the 1960s stimulated the city’s evolution to an industrial city and reformed its structure as an SIT. However, the
heritage of the early Republic’s planned statist policies that lasted more than forty years in Ereğli has shifted with
the privatization of Erdemir in 2006. Whereas Erdemir’s privatization contributed to the national economic
growth, the city’s local socio-economic development has shrunk. This paper, utilizing a qualitative research design
following a theoretical discussion through secondary data sources, asserts that SITs are locally vulnerable to
Central Governments’ policy shifts and especially privatization. Hence, we stress that the Governments’ shifting
policies regarding local areas deeply affect those local people’s lives.
Keywords: Urban Policy Planning, Single-industry Towns, Local Economy, Erdemir, Karadeniz Ereğli.
Değişen Politikalar, Değişen Hayatlar: Tek-endüstrili Kentlerde Yerel Gelişme ve Özelleştirme
Rabıtası
Öz: Bu çalışma, tek-endüstrili kentlerin (TEK) yerel olarak nasıl geliştiğine ve barındırdıkları baskın aktörlerin
özelleştirilmelerinden nasıl etkilendiğine vurgu yapmaktadır. Bu bağlamda, araştırmada TEK’ler özelinde yerel
gelişme ve özelleştirme geriliminin sonuçları gösterilmeye çalışılmıştır. Genel olarak TEK’ler, yerel
sosyoekonomik yapıda tek bir baskın endüstriyel kuruluşun lider aktör olduğu yerlerdir. Devletçi uygulamaların
bir sonucu olarak Türkiye’de merkezi hükümetler uzun yıllar boyunca TEK politikalarını uygulamıştır. Bu
politikalar, belirli bölgelerde kamu fabrikalarının kurulmasıyla ülke çapında sanayi ilerlemesini güçlendirirken
aynı zamanda yerel ve bölgesel sosyoekonomik gelişmeyi de desteklemeyi ifade etmektedir. Ancak geçen zamanda,
kamu fabrikaları aracılığıyla TEK’lerin kurulması yönündeki devletçi politika değişime uğramıştır. Bir kamu
fabrikası olan Erdemir’in yerel sosyoekonomik etkisi altısındaki Karadeniz Ereğli, Türkiye, TEK yapılanması için
tipik bir örnektir. Merkezi hükümetin 1960’lı yıllarda gerçekleştirdiği bir sahil kasabasında demir çelik fabrikası
kurulması politikası, Ereğli’nin bir sanayi kentine evrilmesini ve TEK olarak yeniden kurgulanmasını
dürtülemiştir. Ancak Ereğli’de kırk yıl boyunca takip edilen devletçi politika, Erdemir’in 2006’da özelleştirilmesi
ile terk edilmiştir. Erdemir’in özelleştirilmesi ülkenin ekonomik büyümesini desteklerken, kentin yerel
sosyoekonomik gelişimini engellemiştir. Bu çalışma, nitel araştırma deseni aracılığıyla TEK’lerin merkezi
hükümetlerin politika değişimlerine ve özelleştirmelere yerel kırılganlığını ileri sürmektedir. Böylece, değişen
politikalar, bireylerin hayatlarını da derinden etkilemektedir.
Anahtar Kelimeler: Kentsel Politika Planlaması, Tek-endüstrili Kent, Yerel Ekonomi, Erdemir, Karadeniz Ereğli
Research Assistant, Afyon Kocatepe University Department of Political Science and Public Administration,
ademirkol@aku.edu.tr – ORCID: 0000-0002-7185-5781
Makale Geliş Tarihi: 13.02.2023
Makale Kabul Tarihi: 14.11.2023
15 Amme İdaresi Dergisi, Cilt 56, Sayı 4, Aralık 2023, 14-28
Introduction
How should one approach the dilemma in single-industry towns (SITs) regarding local development
versus privatization dilemma? An extensive comprehension of the socioeconomic impacts of
privatization in SITs is the key to responding to this question. The novel status of SITs is yet worth
exploring. The SITs are unique cases for urban studies in terms of urban economy, local development,
politics, and central versus local nexus. Due to the nature of SITs, they are vulnerable to economic and
social transformations that might be done through the private sector or central governments, such as
privatization, prioritizing the profits of the companies, etc. Hence, urban researchers, local authorities,
and central governments should be aware of the SIT formations and their possible implications when
they would like to make policies regarding these authentic locations. The worldwide phenomenon SITs
are places dominated by one industry, sector, company, or employer. The primary SIT formations are
in Canada, Russia, China, and Türkiye. However, SITs have various impacts on local development as
the divergencies in local and central government systems and political approaches attribute varying roles
to the dominant actors in SITs. The aforementioned vulnerability of SITs lies in their dependence on
one primary financial sector. Therefore, SITs are sensitive to the urban economy and local
socioeconomic development. The lack of long-term, effective, stable, and reasonable urban policy
regarding SITs could result in devastating impacts such as socioeconomic collapse.
In Türkiye, the Central Governments have utilized SITs as national, regional, and local
development tools throughout the second millennium (Keskinok, 2006). Considering the devastating
effects of the First World War, Türkiye tried to strengthen and develop its economy by wisely using
scarce resources during the early-Republican period. As an early attempt to plan the industrial
development of the new Republic, in 1934 and 1938, Türkiye announced and implemented the first two
Five-Years Industrial Development Plans to solely outline the Government’s investment plans. In line
with this perspective, the first two plans generally highlighted the establishment of state-owned firms
(SOFs) and prioritizing the natural resources of the country to decide which industrial sectors would be
commenced and supported. Along with the statist perspectives in the programs, these documents have
also contributed to the economic structural preferences of the country, such as the implementation of
statism, industrialism, and national-sovereign development ideas. That might be the most important
result of the programs as the new model explicitly linked social benefits with economic development
(Özyurt, 1981). Therefore, the Governments implemented specific policies to establish SOFs at
particular locations to fuel national economic growth. Indeed, the attempt not only booms the national
economy but also contributes to the local and regional socioeconomic structures. The country’s limited
financial resources resulted in SOFs being single industries in those localities. The SOFs’ single industry
feature in Türkiye has allowed the Governments to utilize them as vehicles to transfer funding from the
Central Government’s budget to local people. As a result of the tight loyalty to the political unitary in
Türkiye, the SOFs acted as the Central Government’s agents in the local area to contribute to local
socioeconomic development. Therefore, in Türkiye’s case, SOFs have become the most dominant actors
where they were established. Like the socialist industrial companies, SOFs provided or funded primary
public services or made investments at the local level (Lintz et al., 2007).
Karadeniz Ereğli in Türkiye is the typical case for SITs. In Ereğli, Ereğli Iron and Steel
Company (Erdemir) was established as a SOF in the 1960s. Afterward, Erdemir stimulated the city’s
transformation from a coastal town to an industrial city. Ereğli, before Erdemir, had nearly 10,000
population with limited financial activities such as agriculture, fishery, and coal mining (Demirkol,
2021). Even though coal mines surrounded Ereğli and were a significant source of income, the coal
mines did not directly impact the city’s socioeconomic structure. The sense of place in the coastal town
until the 1960s was created by its natural wealth, agriculture, and historical values. However, with the
entrance of Erdemir to Ereğli, the sense of place in the city, socioeconomic structure, demography, and
its unique values have changed (Demirkol, 2022). Erdemir’s construction caused a booming population
Shifting Policies, Changing Lives: The Local Development and Privatization Nexus in Single-industry Towns 16
due to the labor inflows from all around the country. In less than ten years, the laborers who came to
Ereğli doubled the local people and created diversity in the demographic structure (Kıray, 1964).
Nevertheless, Erdemir as a SOF was privatized in 2006 by the Central Government. Afterward, Erdemir
withdrew virtually all its local socioeconomic support (Demirkol, 2021). With the rapidly changing
management approach from an SOF to a private enterprise, Erdemir decreased wages and terminated its
local socioeconomic aid. Therefore, privatization has swept the city’s socioeconomic development
provided by Erdemir in the last forty years. Indeed, privatization has become a structural break in the
city’s history as Erdemir has impacted the local socio-economic development for years to transform the
place from a coastal to an industrial city.
Therefore, this paper theoretically discusses how single-industry towns (SITs) locally develop
and are affected by the privatization of those dominant sectors, focusing on the case of Erdemir’s impacts
on Ereğli in the post-privatization period with an emphasis on the local development that has been
accelerated and promoted by Erdemir over the years. As a previously coastal town transformed into an
SIT by Erdemir, the local development through single industries is the focal point of this study. We have
utilized three structural breaks in the city’s history to compare the local development. Firstly, we have
marked the period pre-Erdemir as its transformative socio-economic impacts on the city. Secondly,
considering Erdemir’s fueling effect on local socioeconomic structure, we have underlined the post-
Erdemir period. Lastly, we have highlighted the privatization of Erdemir, which caused the turmoil and
collapse of the city’s local development. As a methodological approach, we have followed a qualitative
research design including theoretical debate along with secondary data sources for the local perspectives.
In this regard, this paper attempts to reveal SITs’ local development processes in terms of the
contribution of the dominant financial actors over time. This paper also underlines the socioeconomic
impacts of the privatization of these dominant actors in SITs.
The SITs’ unique formation practices in Türkiye through building SOFs and the severe impacts
of privatization on the local development in Ereğli have motivated us for this research. Hence, the paper
is formed as follows. In the first section, we explore the growing practices of SITs reflected in the
relevant literature. In the second section, we argue the local development under the impact of Central
Governments. The third section is devoted to the case, giving insights into Ereğli and Türkiye’s status
in the pre-Erdemir, post-Erdemir, and post-privatization periods. Lastly, we conclude the paper with a
discussion, problematics, and policy recommendations.
The Background of the Novel Phenomena: How Do SITs Grow?
SITs are a worldwide and novel phenomenon due to their unnatural existence through interventions of
private companies or political actors as local entities. The globally experienced concept is worth
investigating from an interdisciplinary perspective. Although Helsley & Strange (2014: 1064) argue
that “no city is really a one-industry town,” the places that are socioeconomically dominated by one
robust financial sector or company are counted as SITs. In general, fishing villages or mining towns are
considered examples of SITs (Stewart, 1958). The SITs are generally under the domination of a single
economic or industrial activity as the main feature (Bradbury & St-Martin, 1983; Canada, 1977). Indeed,
it also reflects the idea that SITs are under the control of labor or capital (Hoyt, 1941). In the existing
literature, SITs are rarely studied in the case of Türkiye. Although Türkiye’s SIT formations diverge
from the worldwide examples, scholars have caught little attention to research this unique value. The
present paper attempts to fill this gap in the literature by focusing on one of the cases of SIT formation
in Türkiye, namely, Karadeniz Ereğli. Nevertheless, as the research on Türkiye’s SITs is scarce, this
section is devoted to reviewing the existing literature on international cases of SIT formation and their
economic growth processes.
17 Amme İdaresi Dergisi, Cilt 56, Sayı 4, Aralık 2023, 14-28
The current literature provides various definitions for SITs. Scholars are using the term single-
profile cities or resource-based cities instead of SITs. Single-profile cities are “where more than 25
percent of the population is employed in one enterprise or group of enterprises of a single sector”
(Zubarevich, 2012: 17). In contrast, resource-based cities are where the local economy mainly depends
on the exploitation of natural resources of the local area (Bradbury & St-Martin, 1983; Li et al., 2013).
The most common examples of resource-based cities are Yichun, China; Pittsburgh, USA; Kitakyushu,
Japan; Ruhr, Germany; and Lorraine, France (Ruan et al., 2020; Yu et al., 2016).
Southcott (1998) advocates that SITs have been created due to Keynesian economic policies.
The Keynesian economic policies have directed the Central Governments to implement the policy as
economic development through central interventions at the local levels. Governments have attempted to
initiate economic activities on local scales via SITs. Transportation features, distance to the resources,
and the need for local socioeconomic development have led some governments to implement the SIT
policy. However, the dependence on single industries has triggered various problems in SITs. As
Rotenberg (2014: 54) puts it, “[t]he most important principle of a single-industry town’s economic
development is to ensure the changes’ social orientation in the economic sphere….” Therefore, SITs are
highly sensitive to socioeconomic transformations. SITs’ economic development has relied on the
production and transportation capacities at the local levels, whereas the social orientation in the
economic sphere is the most critical factor.
The worldwide application of SITs has practical implications for development projects in certain
countries. For instance, Canada has used SITs as a part of its economic development for a long time,
and SITs have been the leading factor of economic geography (Bradbury & St-Martin, 1983; Storey &
Hall, 2018). Yet, the downsizing of single industries in Canada has caused significant challenges in
those SITs (Newbury & Gibson, 2015). Additionally, Russia is an excellent example of SITs (Didyk &
Ryabova, 2014; Pilyasov & Molodtsova, 2022; Tarasova & Rudneva, 2018). Furthermore, China is
another case for SITs, as it has also suffered from shrinkage due to a depression in economic growth
(He et al., 2017). The SITs and their links with those single industries are vital to comprehending
socioeconomic local development practices. In SITs, the “organizational realm is merged with the basis
of individual and community life,” and they are highly open to transformation regarding the changes in
the industry (Hurd & Dyer, 2017: 107). SITs are sensitive to economic adversities caused by their
dominant financial actors. As only one industrial organization leads the city’s socioeconomic life, the
downsizing or decreasing economic activities of these industries may affect the SITs due to the
dependence on these companies (Mayer & Greenberg, 2001). Therefore, SITs are vulnerable places for
socioeconomic crises.
As Findeisen & Südekum (2008) note, single industries are open to quickly growing or declining
and can affect the local industries. From their perspective, single industries might endanger local
economic activities in SITs. According to Parente et al. (2012), diversifying the local economy to make
the place less dependent on a single economic actor is the standard remedy for SITs. Lintz et al. (2007)
argue that single-industry regions such as Lower Lusatia, Germany; Upper Silesia, Poland; Donetsk,
Ukraine, or the city of Most, Czechia, will be problematic locations in the future in terms of stagnation
unless they find out new industrial or economic activities to survive. Accordingly, in France, the main
features of shrinking cities such as Lorraine, Nord-Pas-de-Calais, and Haute-Normandie are their
dependence on a single industry (Cunningham-Sabot & Fol, 2009). Persky and Moses (1984) underline
that from the point of view of geographers, historians, and economists, industrial specialization is
dangerous for a city’s growth if the specialization level is high. However, the literature has
contradictions between single industries and their local economic impacts. Firestone (2008) highlights
that urban diversity, not being dominated by one economic actor, is a challenge for urban economic
theory. Therefore, “only specialized single industry cities exist in equilibrium” (Firestone, 2008: 2).
The case of Türkiye is considerably diverging from the international cases of SITs. This
divergence derives from the following factors. Firstly, SITs in Türkiye are not primarily initiated by
Shifting Policies, Changing Lives: The Local Development and Privatization Nexus in Single-industry Towns 18
private entities such as companies or capital owners. Instead, the State plays the main role in this process
in Türkiye. Secondly, in the case of Türkiye, the SITs do not exist out of nowhere, which means they
are established under a transformation process of already existing localities. Lastly, the shrinkage of
SITs in Türkiye does not mean that those cities will become ghost towns or totally unpopulated
locations. Rather, SITs are affected by the privatization processes of their predominant industrial actors
by the Governments and their shrinkage generally imposes socioeconomic complications.
Türkiye has widely employed SITs for local, regional, and national socioeconomic development
throughout the 20th century. According to Keskinok (2006), Türkiye has used SOFs to intervene in SITs’
socioeconomic structures. Central Governments in Türkiye have utilized SOFs to fuel local development
and support regional and national economies (Demirkol, 2021). As a typical case of an SIT, Ereğli was
transformed into an industrial city from a coastal town in the 1960s through the Central Government’s
decision to establish Erdemir in the city center (Demirkol, 2021). In line with the SIT concept, Erdemir
has become the primary source of income within the city over the years (Demirkol, 2020; 2021; 2022;
Akbaş, 2013; 2018). The triangulation among Ereğli, Karabük, and Zonguldak after the establishment
of Erdemir has formed the import-substitution industrialization model’s spatial reflection (Şengül &
Aytekin, 2017: 27). Indeed, the city’s socioeconomic structure has been affected by this impact as
agriculture and other direct production sectors have crashed under Erdemir’s enormous weight. Less
than ten years after the construction, the previously small coastal town became a more populated,
diverse, and financially robust place as an SIT. The city has gained the SIT formation via the direct
linkage between the majority of the local population and Erdemir in a socioeconomic system. The
Erdemir workers and their families have rapidly become the majority of the local population. Hence,
Erdemir has naturally become the city’s most significant and dominant actor who has reformed the
socioeconomic structure. However, it is noteworthy that Erdemir was a SOF until 2006. The Central
Government’s control over Erdemir has also been reflected in the continuous policy of using SOFs as a
local socioeconomic development tool in Türkiye. In this line, Erdemir was responsible for the
socioeconomic investments in the city instead of directly government-supported projects. Erdemir
amplified the local financial development through its contributions to social life, demography, and
economy. All in all, it has become the dominating economic actor in the city (Demirkol, 2020).
How to Locally Develop: Central Government’s Intervention in the
Localities
The local development concept is a multi-dimensional process that requires rigorous policy
implementation. It is nowadays recognized by local, national, and international actors as a practical
bottom-up approach that needs attention (Greffe, 2007). Accordingly, urban development and
sustainability have become influential urban planning agendas throughout the 1990s and 2000s. In the
nexus between sustainability and urban development, sustainable urban development is a long-term
project that requires practical analysis and forecasting (Wei et al., 2015; Yang et al., 2017; Yigitcanlar
& Teriman, 2015).
In modern globalization, cities and regions compete to attract governments or companies to get
investments (Malecki, 2007). On the one hand, the competition to get assets contributes to local
economic development in a significant way: The competing cities can attract skilled labor and tourists.
On the other hand, over the 1970s, local development was utilized as a remedy to the macroeconomic
crises in Europe and North America. The critical levels of unemployment and economic shrinkage in
Europe and North America at the national scale stimulated local actors’ reactions to the crises to initiate
new projects to boost employment opportunities (Greffe, 2007). Therefore, the existing literature and
case studies have underlined the importance of local development and economic actors in resolving
macroeconomic crises in countries.
19 Amme İdaresi Dergisi, Cilt 56, Sayı 4, Aralık 2023, 14-28
Nevertheless, the local development and macroeconomic financial robustness narrative are not
the same in SITs. Unlike the Marshallian approach to local economies that perceives local economic
structures as coherent systems of industries, labor markets, and economic policies (Rallet & Torre, 1999:
380), the prominent dominant financial actors primarily feed the socioeconomic system in SITs. As Coe
(2001: 1756) puts it, “[Ann Markusen] terms this case the ‘Marshallian industrial district,’ defining its
characteristics in terms of dense networks of trade and cooperation between local small firms embedded
within a relatively internalized local labour market.” Therefore, Marshallian districts are where no
dominant industry plays the primary role in local development (Coe, 2001: 1756). One of the typical
cases for Marshallian districts is the 19th-century City of London. Back then, the city consisted of
several networks among small firms and markets (Amin & Thrift, 2008).
In contrast with Marshallian districts, typical SIT cases present the dependence on one major
industrial company or employer in the city, thus, the industry’s dominance over the local economy
(Becattini, 2017). In terms of local economic development, local dependence is also significant. Unlike
the Marshallian districts, SITs are highly dependent on prominent financial actors. As Cox and Mair
(1988: 307) have indicated, the local dependence on industrial organizations may create coalitions and
cooperation among local businesses to boost local economic development. Yet, SITs rely only on one
dominant financial actor, which has a pivot impact on the city’s socioeconomic structure.
Furthermore, the Central Government’s interventions in local and regional economic projects
are also essential. Therefore, investments and public expenditures may be the other significant factors
for local economic development (Raco, 1999: 958). Local actors, supported and funded by the Central
Government, may tremendously contribute to local economic development, yet there are several ways
to make this contribution. Typically, the Central Governments may utilize urban policy planning and
financial analyses. As in Türkiye’s case, SITs may emerge due to governmental preferences and public
policymaking to boost national, regional, and local economies. In Türkiye, Central Governments
decided to build SOFs in specific regions. The SOFs in Türkiye have acted as the local economic
development actors funded by the Central Government while contributing to the national economy
through mass production and export. Yet, Türkiye’s attempt to establish SITs via SOFs to boost the
economy can result in successful economic contributions only if the urban policy planning and local
financial analysis are perfectly done. If there is no projection about the local economic dynamics of the
urban area after establishing SOFs, local socioeconomic dependence occurs toward these firms. The
policies to set SITs via SOFs by Governments result in local reliance.
Therefore, the Central Government’s decision to build an SOF in a non-industrial city also has
significant impacts on the local people’s future. Coastal towns or small cities transformed into industrial
areas by Governmental decisions to establish SOFs may result in SIT formation in the relevant areas.
The SOFs in SITs dominate the local financial sectors, such as the labor market and consumer prices.
In this study, we attempt to underline the role of Central Governments in deciding whether the relevant
areas will be formed as SIT. The intervention pressures the local financial sector as it triggers an
unnatural development narrative. The lack of urban policy planning in SITs endangers the local financial
industry in terms of privatizing those SOFs. The Central Government policies to establish the SIT via
an SOF stimulate the local dependence on the firm. However, the policy shift to privatization of SOFs
threatens the local economies in SITs and the local people’s lives. The SOFs, in the case of Türkiye,
have followed the policies to fuel local, regional, and national economic development to penetrate the
financial processes (Keskinok, 2006; Demirkol, 2021). However, the management of privatized SOFs
cannot be under a similar mindset. Hence, the lack of urban policy planning and future projections of
SITs may result in extraordinary consequences after the privatization of SOFs regarding local financial
development.
Shifting Policies, Changing Lives: The Local Development and Privatization Nexus in Single-industry Towns 20
Exploring the Local Development and Privatization Nexus in an SIT
Karadeniz Ereğli City, Türkiye, is located in the northern part of the country. The majority of the local
population in the Zonguldak province are residents of Ereğli (see Table 1). In history, Ereğli had
emerged as a coastal town where the coal mines contributed to the formation of the city over the 19th
century. The coal mines densely affected local peoples’ lives (Aytekin, 2007: 41). The Ereğli coal mines
were the first ever location for discovering coal in the Ottman Empire in 1829 (Özeken, 1944; Öğreten,
2006). As Oskay (1983: 65) stressed, the discovery in the 19th century triggered the region’s first phase
of socio-economic transformation due to the rapidly increasing labor population (see Table 2). The labor
population in the region was less than five hundred until the 1850s, yet it reached an extraordinary
number of 50,000 workers in the 1960s (see Table 2). The density also resulted in a boom in urban
population (Makal, 2006: 123; Roy, 1976: 125; Quataert, 2009: 91; 1983: 54). Yet, in the 1960s, the
coastal town started to be industrialized by establishing an iron and steel production company, Erdemir,
under public-private entrepreneurship (Şeni, 1978: 85; Akbaş, 2018: 49). The public-private
entrepreneurship modeling for establishing Erdemir in 1960 lasted until 1976 with the company's
nationalization; thus, Erdemir became a SOF. Table 1 provides the latest data on the distribution of
population all over Zonguldak province in line with all its districts, and Table 2 concludes the
demographic transformations in the city over the years.
Table 1. Total Population of Districts in Zonguldak as of 2022
District
Population
Ereğli
175.309
Merkez
118.776
Çaycuma
90.583
Devrek
57.069
Kozlu
49.767
Alaplı
42.720
Kilimli
33.121
Gökçebey
21.165
Total Population of Zonguldak Province
588.510
Source: TURKSTAT (2023).
Table 2. Total Labor Population at Ereğli Coal Basin and the Urban Population of Ereğli (1850-1965)
Years
Total Labor Population
Years
Urban Population
The 1850s
500
The 1840s
2.000
1900
4.300
The 1880s
4.000
1905
6.600
1890
6.274
1911
9.600
1899
6.274
1914s
10.000+
1910
6.000+
The 1940s
~25.000
1927
5.180
The 1950s
~30.000
1935
5.843
1965
~50.000
1940
5.415
1945
6.360
1950
7.132
1955
7.878
1960
8.812
Source: Gathered by the author from Makal, 2006: 123; DİSK, 1955: 8; Roy, 1976: 125; Eldem, 1994: 51; Quataert, 2009:
73, 91; Quataert, 1983: 54; Kıray, 1964: 35.
The change and the implications of forming an SIT caught the attention of sociologists in
Türkiye. In 1962, Mübeccel Kıray conducted the first field research in Ereğli to investigate the
sociological transformation of Ereğli from a coastal town to an industrial city. Kıray’s research, Ereğli:
21 Amme İdaresi Dergisi, Cilt 56, Sayı 4, Aralık 2023, 14-28
A Coastal Town Before Heavy Industry, shed light on the city’s transformation process. The author
predicted that there would be a transition from a village to an industrial city in Ereğli through Erdemir.
Kıray (1964: 170) also noted that the impacts of accelerated transformation in the city’s socioeconomic
structure would only be observed after years. Then Kıray (1964: 197) made a stunning conclusion to
point out the ongoing socioeconomic rapid transformation in Ereğli during the construction of Erdemir
as follows: “…for its people, the big Ereğli is a city in which the employment opportunities are more,
wages are higher, yet more expensive.” The ongoing construction of Erdemir accelerated the city’s
transformation from a coastal town to an industrial city via its impacts on the local socioeconomic
structure (Şafak, 2017). The trustworthy and reliable data is lacking to support this claim, yet this
structural impact was noted in the research done at that time. For instance, the Yearbook of the Office
of Governor of Zonguldak (Zonguldak Valiliği, 1973: 62) in 1973 described Ereğli as the third industrial
city over the course of the 1970s. In line with this, Şengül & Aytekin (2017: 27) have linked the
construction of Erdemir and Ereğli’s pronounced role to be one the pillars of the spatial center of import-
substituting industrialization of the country along with Zonguldak and Karabük provinces. One of the
strongest proofs to observe the socioeconomic transformation in the city was Kıray’s (1964) survey on
the site. Her research shows that the most powerful occupational group in the city was merchants at that
time. However, she explicitly stresses that the most prestigious occupational group was about to change
due to Erdemir. Previously, the locals of the city had attributed more respect to the public officers
working at the Coal Mine. Yet, after the construction of Erdemir started all of a sudden, the locals
approached Erdemir workers with more respect as the wages were almost doubled in Erdemir compared
to workers in the Coal Mine (Kıray, 2000: 87). Furthermore, the survey revealed that in 1964, only 7,4%
of current merchants would like their sons to have the same job in the future whereas 27% of them would
like to see their children as engineers (Kıray, 2000: 98). As a fact, Kıray was also skeptical about this
data to see whether this kind of perception in the city directly linked to Erdemir.
Hence, in this context, Ereğli had begun the first-phase socioeconomic transformation during
the coal mining phase. However, rather than being a mining town, Ereğli was a transportation line
between its villages and coal mines. It was also formed as a marketplace where the miners could find
the products (Kıray, 1964). Notwithstanding, Ereğli rose as a unique location during the construction of
Erdemir. In the second phase, the socioeconomic transformation in Ereğli was triggered by Erdemir’s
construction. The coal mining period had not directly impacted Ereğli’s center, yet Erdemir shaped the
old coastal town’s new local identity and socioeconomic structure all around the city. The construction’s
first implication was on the coastal town’s economic system. In Demirkol’s (2021; 2022) research,
interviewees in Ereğli underlined that the city was a beautiful fishery town before Erdemir. It was also
a vacation destination for foreigners as it has a clean sea and beaches in line with the definition of a
coastal town. Nevertheless, the economic structure of coastal and industrial towns would be different,
and the heavy industry and the mass production culture shaded the city’s local values. Indeed, Erdemir,
as the predominant actor in the city, transformed the local socioeconomic structure (Şeni, 1978). The
new industrial city gained 10,000 workers as new residents by the end of the 1960s. In 1970, the city’s
total urban population reached 28,904 (Kıray, 1964; Zonguldak Valiliği, 1973). Şeni (1978: 102) points
out that, in the 1970s, the labor population of Erdemir was relatively higher than other companies in
Türkiye, so the city became a crucial location for transformations. Indeed, there is no reliable yearly
data for Ereğli as a district since the 1960s till today, and we have gathered various sources to conclude
the rapid increase of labor population in Ereğli over the 1960s and the 1970s. According to the data,
Erdemir gained 2,000 workers for the construction of the company in 1962, and this number reached
4,200 in 1964. The boost impact of the company could be seen in the 1970s as the number of laborers
jumped to almost 10,000 in 1972 (Kıray, 1964: 177; Şeni, 1978: 102; Şafak, 2015: 19).
The company positioned itself as the city’s dominant actor and became its primary livelihood
source. The company's power has been pictured in the words of Erkan’s (2005) book. The quote in
Erkan’s (2005) biographical book, including his memories, implicitly shows the importance of the
company: the people of Ereğli should realize the value of their religion and Erdemir. Thus, Erdemir
Shifting Policies, Changing Lives: The Local Development and Privatization Nexus in Single-industry Towns 22
should be as valuable as a religion for locals. The overwhelming number of workers among the city’s
residents (Türk Metal Sendikası, 2006: 254), particularly almost 5,000 in 1973 (Şafak, 2015: 19),
increased the local authority and power of Erdemir. As a SOF, Erdemir dominated the labor market, and
besides the workers, the rest of the residents in Ereğli also had links with Erdemir. The company
provided high salaries to the newly emerging worker class in the city. The dominance of the labor market
and local financial sectors led Erdemir to become the city’s single industry. The single industrial feature
and its impact on local socioeconomic structure have been reflected in public backlashes against the
firm’s negative policy implementations and decisions concerning workers and local people. A long-
lasting strike was organized in Ereğli in 1973 against the wage policy of Erdemir (DİSK, 1974). Hence,
the old coastal town formed a unique case for publicly initiated SITs. The authenticity of Ereğli derives
from the transformation to an SIT by an SOF. As a SOF, Erdemir became responsible for public
investments and expenditures in the city. However, at the same time, the company was determining the
economic structure in the city. In Demirkol’s research (2022: 141), an interviewee explained this
situation through the expression that Erdemir was determining the market prices in the city, even for
tomatoes. Because of the high salaries of Erdemir workers and the predominant numbers of them, market
prices increased.
In the second development period of the city, Erdemir provided aid to public institutions such
as the orphanage, organized social events, and fueled the local economy (Kıray, 1964). Indeed, the
company transformed the city’s identity, culture, and economy. The period has been marked by labeling
the city as little Germany due to increased welfare and economic growth (Demirkol, 2022: 18). Erdemir
also played an intermediary role between local and central governments. Zonguldak and Ereğli
competed to gain more public expenditures during this period. Yet, instead of investments or budget
transfers from the Central Government, most investments in Ereğli were made by Erdemir. The booming
economy resulted in prestigious brands penetrating the local economy, such as bank branches or luxury
car dealers. The improving financial status of local people allowed them to enjoy vacations in the
country’s most expensive tourist destinations and children’s enrollment in private schools (Demirkol,
2020). Hence, the post-Erdemir period has been marked as fueling an impact on local socioeconomic
development. In this period, Erdemir contributed to the city’s local economy via salaries and social aid,
positively affected social life, and diversified the population (Demirkol, 2022).
Nevertheless, the narrative changed after the privatization of Erdemir in 2006. After forty years
of overwhelming contribution to the local and national economic development as a SOF, in 2006, the
Central Government shifted from statist and interventionist policies to liberal economic privatization
policies. However, the privatization decision created a public backlash in Ereğli. Although they could
not impact the consequences of privatization, workers and local people intensively criticized it through
organized public events and protests. Albeit the public backlash and turmoil, Erdemir was privatized on
27th February 2006 and owned by Ordu Yardımlaşma Kurumu (OYAK) (erdemir.com.tr, 2023).
Hence, the third structural break in Ereğli’s local history was marked by this privatization in
2006. Previously relying on aid and high salaries and dependent on the labor market orientation of
Erdemir, Ereğli has crashed in terms of the local socioeconomic structure. Most of the local people had
been aware of this decline before the privatization as they perceived it to be a loss of the values created
by local people over the years and reflected these feelings in various local protests (Türk Metal
Sendikası, 2006). Accordingly, the public backlash by local people continued after the privatization.
Previously SOF but now a private company, Erdemir prioritized its profits over the locality. The new
managerial approach of the private sector had adverse impacts on local people. First, OYAK managers
decreased salaries in Erdemir by 35% after the privatization (t24.com.tr, 2023). Secondly, Erdemir
established its own transportation firm to eliminate the sector of the private steel merchants in the city,
which was the second financial sector depending on trading Erdemir’s products.
The sector's size was more than a thousand in the labor market. As a result of these
interventionist decisions, Erdemir obviously attempted to hamper the local socioeconomic welfare in
23 Amme İdaresi Dergisi, Cilt 56, Sayı 4, Aralık 2023, 14-28
terms of local development. Albeit its increasing profits and contribution to the national economy,
Erdemir hindered local financial growth. The economic burden on the local people is reflected in the
judicial processes. The rapidly growing number of bankruptcies and enormous workload on the
enforcement courts caught the attention of mainstream media (radikal.com.tr, 2019). Therefore, the local
people did not believe in the benefits of privatization in favor of local financial status. However, they
experienced Erdemir’s socioeconomic contribution to the city before the privatization and compared
SOF and private companies. Erdemir lost its pivot roles in the city’s local financial and social sectors
during this period. Erdemir’s direct and indirect impacts on the local financial industry bankrupted the
local economy. In the first group of direct activities, the company cut budget transfers to the local social
activities and facilities, terminated aid programs, and followed the wage deduction policy of up to 35%
among all workers (t24.com.tr, 2023). Secondly, the company indirectly affected the local economy.
The wage deduction policy resulted in stagflation in the local market, as it has been highly stressed by
the local people (Demirkol, 2021).
Erdemir workers, who were classified as the wealthy class before, had been booming the local
financial sector via their expenditures. However, the privatization and the new policies of private
companies adversely affected workers’ financial status and led them to invest in savings. Hence, the
local economy, dependent on the single industry company Erdemir, has shrunk. The demolished
socioeconomic structure in the city thus triggered a chain reaction in local finance. The local merchants,
such as the steel trade sector, collapsed after Erdemir’s policies as a private company. However, Ereğli
had been relying on the income and wealth provided and created by Erdemir for the last forty years. The
dominance of Erdemir over the city has formed Ereğli as an SIT. The privatization decision taken by
the Central Government in favor of national economic gains has resulted in the collapse of local
economic development (Demirkol, 2021).
The essential point after the privatization was the lack of new urban policy planning in terms of
alternative local economic development in the SIT. The Central Government did not provide a unique
urban economic policy to the SIT, and Ereğli was also unprepared for such economic devastation after
the privatization. Erdemir’s pivot role for the SIT’s local economic development for the last four decades
has allowed us to conclude that Erdemir was the city’s only survival strategy for fostering local financial
sectors. The specialization of a single industry and lack of industrial diversification in Ereğli have
sparked the economic crisis within the local market after the privatization and resulted in the shrinking
of the local economy.
Discussion and Conclusion
This research has investigated and theoretically discussed the local development and privatization nexus
in SITs. In the case of Ereğli, we have attempted to underline the adverse impacts of the privatization
of the SOF that has dominated and fostered local economic development. To achieve this end, we have
followed a theoretical explanation of SITs and growth nexus in the case of Ereğli and Erdemir.
Nowadays, Ereğli reflects a distressing narrative for local people. The city has experienced
privatization, and in local people’s words, the new private company has swept the local people’s wealth
(Demirkol, 2022). The prosperity of the city has been lost due to privatization. Türkiye’s statist policies
to build SITs via SOFs have shifted toward liberal economic privatization policies, and this policy shift
has adversely affected the SITs in terms of local economic development. The heartbreaking local
financial status in Ereğli is a novel case of unplanned actions of Central Governments over the localities.
Consequently, the city’s local economy has been broken. The contrasting managerial approaches of
SOFs and private companies undermine local prosperity while fostering national economic growth.
Shifting Policies, Changing Lives: The Local Development and Privatization Nexus in Single-industry Towns 24
Maximizing their profits, private companies in SITs let the local people down in terms of local
socioeconomic support mechanisms.
Indeed, the SITs are unique cases for urban policy planning and local development. As an SIT
implementer, Türkiye has formed those cities as parts of local, regional, and national socioeconomic
development tools. Hence, the monopole and dominant industries in SITs have been utilized as
intermediary institutions between the Central Government and local people to fuel local economic
development. The cruelty of privatization in SITs has been crystallized in the case of Ereğli, Türkiye.
The city has experienced devastating impacts of privatization as it almost collapsed in terms of the local
economy, according to local voices (Demirkol, 2022). At this moment, an essential question is pending
for a reliable answer: Whose wealth should be prioritized? Locals’ or Central Governments’?
Furthermore, as it is very well specified in Genç et al.’s (2021) book, this case should be interpreted
through the lens of a dilemma between the globalized economic structure and cities.
The case in Ereğli diverges from the universal application of SITs. Ereğli has been formed as
an SIT by the Central Government’s decision to build an SOF in the city center. Afterward, the previous
coastal town was reproduced by Erdemir as an industrial city. The SOF created and shared enormous
levels of wealth and prosperity with the local people. Yet, the narrative has converted to a drama after
the privatization. The local perspectives genuinely provide their feelings and link the city’s
socioeconomic fall with the downsizing in the local economy, stagflation, narrowing labor market,
emigration of locals, and loss of hope (Demirkol, 2022). The city did not totally collapse, unlike the
ghost towns in other countries, albeit the city was socioeconomically destroyed. The noteworthy
contribution of this research emphasizes the single actor and its role in the city’s various phases in terms
of local development.
On the one hand, the Central Government in the 1960s had decided to form an SIT in Ereğli via
the establishment of Erdemir. The SIT formation had barely improved and stimulated other sectors in
the city and left the city dependent on a single industry. On the other hand, the Central Government in
the 2000s shifted the statist policies to liberal economic approaches and favored the privatization of
SOFs in SITs. Through the privatization decision of the Central Government, Ereğli collapsed in terms
of local socioeconomic development. The mono-industrial dominance of Erdemir over the city has
limited local people to invest in other sectors. Hence, the dependence on the SOF has led the locals in
terms of entrepreneurship and self-help. Previously, the city's protector, Erdemir, changed its role over
the local investments and financial support after the privatization. Consequently, local people
desperately needed Erdemir’s fostering impact on local economic development have been left hopeless.
The vital point in this progress is highlighting the innocence of local people. Ontologically, they did not
decide to reform the coastal town as an SIT. They enjoyed the benefits and wealth provided by the SOF
as a statist economic policy in the 1960s. Yet, they were not also the ones who decided the privatization
of the predominant local economic boomer. Hence, the locals are the innocents in this narrative whose
lives have been changed due to policy shifts.
Here, we extract the problems of privatization in SITs considering the Central Governments’
responsibilities. First, the lack of urban policy planning led to the monopole-dominant economic
structure in Ereğli. Building an enormous heavy industry complex in a coastal town inevitably results
in the SIT formation. In this sense, Central Governments are responsible for urban policy planning prior
to their decisions that will overwhelmingly transform the local socioeconomic structures. Becoming an
industrial city, Ereğli has experienced turbulences in the local economic policies. The unpreparedness
of the Central Government to envision the city’s future status has caused the random market orientation
in local economic sectors. The lack of balancing actors in the local economy has led to the predominance
of Erdemir over the city and the emergence of the SIT. Secondly, over the forty years of rise, the Central
Governments did not have an alternative economic growth plan for Ereğli. Although the State Planning
Organization had been established for such a process, they did not focus on Ereğli and its future
projections regarding the local economy, labor market, and sectoral segmentation. Thirdly, the Central
25 Amme İdaresi Dergisi, Cilt 56, Sayı 4, Aralık 2023, 14-28
Government’s ignorance over the local backlash to privatization has limited policymakers to investigate
the local consequences of privatization in an SIT. Lastly, the Central Government did not provide an
alternative economic plan for local development after the privatization. The Central Government, in this
regard, has left the local people unattained and unaccompanied in the post-privatization period.
Obviously, the Central Government prioritized public budget maximization over local prosperity.
After framing the problematics, we have several policy recommendations for Central
Governments regarding the local development and privatization nexus in SITs. Firstly, we recommend
that Central Governments understand the significance of urban policy planning in SITs. The Central
Governments should rigorously investigate the local economic structure in SITs and provide urban
policy planning, including the future projections of the city’s development. Secondly, the
unpredictability of Central Governments’ policies results in unpreparedness for the new
implementations in SITs. Their apparent dependence on the mono actor limits the local people from
integrating into a new local economic model. Hence, we recommend that the Central Governments avoid
unanticipated policy shifts in SITs. Thirdly, the privatization of the SOF should not be an option in SITs.
Over the years, SITs have become more dependent on the SOF regarding the local economy, labor
market, budget transfers, and public expenditures. Yet, private companies do not sustain this managerial
approach to prioritize the local economic structure over their profits. As a result of the privatization of
SOF in the SIT, the local financial sectors shrunk and collapsed. Hence, the local economic
demolishment of SITs after privatization is inevitable. As a result of this, we recommend that the Central
Governments support and improve the quality of SOFs located in SITs rather than privatizing them.
In short, SITs and local economic development have been a prolonged and complex narrative.
In this complexity, generalizing SITs whether they are disadvantaged in terms of economic growth is,
per se, problematic. Remarkably, researchers should rigorously investigate each case of SITs to
elaborate on whether they benefit from the dominant financial actors in terms of socioeconomic
development. In the case of Ereğli, privatization adversely affected the SIT’s local economic
development. Future studies may investigate the microeconomic indicators in SITs to reveal the level
of dependence on the dominant actors or to quantify the local economic impacts of privatization.
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