The relationship between trade openness, employment and inflation in the turkish economy within the context of a globalizing world

Trade openness is an indication of the ability of a country's integration with the outside world. With the decisions of January 24, 1980, Turkey made its economy considerably outward-oriented with export-oriented industrialization policies instead of import substitution industrialization policies. The impact of trade openness on the macroeconomic indicators of a country has been the subject to many studies in foreign countries. In this study, it is investigated if the foreign trade policies before 1980 and after 1980 applied by Turkey have had any impact on macroeconomic indicators such as unemployment and inflation. In this context, in the first part of the study, the concepts of globalization and trade openness are highlighted, and the changes in the rates of foreign trade policies and trade openness applied by Turkey from its founding years to today are evaluated. In the second part of the study, the conceptual and theoretical basis of the indicators of unemployment and inflation and the effects of the policies applied in Turkey on the indicators of unemployment and inflation in the historical process are included. In this study, the relationship between trade openness and macro variables such as inflation and unemployment in 2005Q1-2018Q1 periods has been examined. The variables used for analysis have been obtained from TurkStat and CBRT official site. Before the analysis is conducted, standard unit root tests are applied to the series. After the unit root tests, VAR model is established to explain the relationship between variables by doing Johansen cointegration test, Granger causality test. Effect-response and variance parsing results of VAR model are interpreted.