Kaldor's contribution to economic and analysis of Kaldor's law by symmetric and asymmetric causality tests in Turkey

Kaldor has provided many contributions to economics as a Post Keynesian economist. The main contribution of Kaldor is the industry based growth to economic theory. The relationship between the industrial and economic growth is examined by the Kaldor's laws. In this study, Kaldor's contributions to economics are explained and Kaldor's first and second law are tested by using symmetric (Toda-Yamamoto (1995), Hacker-Hatemi-J (2006)) and asymmetric (Hatemi-J (2012)) causality tests for Turkey. The industrial sector has experienced significant structural changes due to the import substitution strategy abandoned, and export-oriented industrial strategy can be adopted after the 24th January 1980 Decisions in Turkey. Considering these structural changes, the period 1980-2014 is selected in this study by annual data. According to the results of Toda-Yamamoto (TY) (1995) and Hacker-Hatemi (2006) causality tests, Kaldor's first and seconds laws are valid for Turkey. TY causality analysis shows that industry value added has positive effect on economic growth and labor productivity in industrial sector. Hatemi-J (2012) asymmetric causality test results indicate that, Kaldor's first law is hold in Turkey, but there is no supporting findings for Kaldor-Verdoorn law. These results show that, the development of the industrial sector promotes economic growth in Turkey.