An analysis of the relationship between foreign trade and economic growth in Turkey over the period 1980-2009

Abstract: This study analyzes the relationship between foreign trade and economic growth in Turkey during the last three decades while particularly observing distinctive feature of the last decade in terms of economic growth-foreign trade relationship. The study adopts two main methodological approaches. The first approach includes two econometric analyses based on VAR and VEC models regarding periods 1987:1-2007:3 and 2000:1-2007:3 for investigating the dynamic relationship between GDP, exports and imports. The second approach includes the analysis of composition change in foreign trade of Turkey in the period 1980-2009 based on descriptive statistics. The results of analyses suggest that imports was one of the significant determinants of the economic growth in Turkey during the periods 1987:1-2007:3 and 2000:1-2007:3 whereas exports did not have important impacts on it. It is found that the export growth was significantly affected by the GDP growth, which indicates growth-led export pattern in Turkey during these periods. Also there is found no significant relationship between exports and imports. Even though the distinctive characteristic of foreign trade pattern of the last decade is observed, the results do not support that the last decade distinct from the previous decades in terms of foreign trade and economic growth relationship.