As a starting point, it is necessary to provide a summary of basic socio-economic and political factors to illuminate the failure of the Ottomans in adapting to global economic changes and in creating effective institutions. The Ottoman economy was integrated with the international economic system, however this integration came under the control of the European states before the Tanzimat Reforms in 1839-76 and, thus, it was disadvantageous to the development of Turkey’s productive resources and state revenues. An agricultural economy without land ownership or property rights and the lack of population density in cities also inhibited the development of division of labor and entrepreneurial classes. Ethnicity was a major dividing factor, overshadowing class divisions. The mode of agricultural and industrial production was formed by the state to establish social order and sustainable revenue sources for the military and bureaucratic purposes. In the political economy of the Ottoman Empire, wealth was not necessarily instrumental for gaining political power. This very structure not only failed to adapt to the changes in global trade and industrial markets but also prepared the conditions for the economic collapse.