The relationship between economic growth, foreign trade and electricity consumption: The case of Turkey

Turkey began to integrate global markets after 1980 by choosing exports growth model and has taken a major step in this integration, especially with the Customs Union which signed between Turkey and European Union in 1996. Security of energy supply and diversification, which is one of the essential inputs for production, has become a major problem for Turkey targeted to increase the share of exports in GDP. In this context, the relationship between electricity consumption, which is one of the main indicators of energy, and other macroeconomic indicators is very crucial. In this study we investigate causal relationship between exports, imports, gross domestic product and electiricity consumption, in order to identify the determinants of electricity consumption, Electricity consumption per capita, gross domestic product per capita, import and export data which belonging to 1960-2017 years were used in the study. Cointegration test was applied to determine whether there is a long term relationship between the variables. As a result of causality tests there are one way and , from electricity consumption to growth and imports; from growth to import and export; finally form imprt to export there are Long term coefficients were positive and significant in the model where electricity consumption was a dependent variable. Causality tests were also conducted due to cointegration test. As a result of causality tests there is a one-way causality relationship from electricity consumption to growth and imports; from growth to import and export; and finally from import to export. According to these results, the policies that decision makers will apply on electricity consumption will have an impact on economic growth. In addition, increasing in wellfare will increase trade openness; so that foreign trade policies. Because Turkey Economy has integrated to the world economy, foreign trade policies must designed accordingly. Keywords: Energy Consumption, Electricity Consumption, Economic Growth, Cointegration, Causality, Trade Openness, Import, Export