The relationship between growth and exports: what if the impact is negative Evidence form Turkey

Abstract

Purpose- The effect of economic growth on exports in Turkey and the direction of the relationship have been determined. The data were obtained from the World Bank data system and TUIK (Turkish Official Statistics Institute, 2021 data were obtained from here) and annual data for the period 1961-2021 were used. Analyzed with Auto Regressive Distrubuted Lag Models (ARDL) bounds test approach and Toda&Yamamoto Causality Test. Methodology- The data set was created using annual data and analyzed in this way. Then Vector Autoregressive Model-VAR was created. Then, Toma&Yamamoto causality test and ARDL were applied. In addition, Breusch-Godfrey Autocorrelation LM Test, Breusch-Pagan-Godfrey Heteroskedasticity Test, unit root test, normality test and CUSUM tests were applied to verify the accuracy of the output. Findings- It is concluded that there is a long-term relationship between the ARDL Bounds test approach and the variables where economic growth affects exports negatively in the long run, and a 1% increase in economic growth causes a decrease of 1.18 million dollars in exports in Turkey. The error correction term, which is calculated export in the long run, shows that the imbalances that may occur in the short run are corrected in the long run. According to the results of Toda-Yamamoto causality analysis, a causal relationship was found from Growth to Export. Conclusion- The aim of this article is to find the causal relationship between Growth and Export in Turkey in the widest possible range and with the most up-to-date data and to reveal the extent of the causal relationship between them. As a result, although there is a causal relationship from Growth to Exports, this relationship is negative in the long run. This result has not been included in the Turkish literature before. Keywords: Economic growth, exports, VAR, Toda&Yamamoto, causality, ARDL JEL Codes: B41, F14, F43