FOREIGN TRADE-ECONOMIC GROWTH RELATIONSHIP: A CASUALITY ANALYSIS IN TURKEY CASE

Celal KIZILDERE

This study has been designed to analyze the casuality relationship between foreign trade and economic growth in Turkey. With this aim, annual data of 1970-2018 period have been used. The variables used in the analysis are the items that make up the annual growth rate and foreign trade. Gross Domestic Product (GDP), representing annual growth rate, export (EXPRT) for foreign trade, and import (IMP) have been handled as variables. Export represents the ratio of import to GDP and import represents the ratio of export to GDP. Data related to variables used in the analysis have been received from World Bank database. The reason why this period has been selected is the recent foreign currency volatility and the economic outlook, arising out of the global financial crisis of 2008, caused by the United States of America (USD), which began in the late 2007, gaining impetus in 2008 and lasting until the beginning of 2019. Therefore, different from other studies, this study aims to meet the need to make analysis through up-to-date prices. In time series analysis, first stagnancy of the series is analyzed. For this reason, stagnancy of the series has been tested with Augmented Dickey Fuller (ADF) model. Next, Granger casuality test has been conducted. As a result of the analysis, while a one-way causality relationship was determined from economic growth to import, export to import, and economic growth to export, no causality relationship was found among other variables. According to the data received in the research, it is possible to say that, in Turkey, economic growth depends on domestic demand. This result complies with the current economic situation.

Keywords: Foreign Trade, Economic Growth, Granger Causality Test, Unit Root Test, Analysis.