The effect of oil price fluctuations on the manufacturing industry: The since of 2000 to present Turkey

With industrialization, energy resources have an increasingly important place in the economies of the countries. Petroleum, which is one of the primary energy sources, is used as an important input for the production sector and it is included in many of the goods used by consumers in daily life. The most important input of the petroleum manufacturing industry is the driving force of economic growth in the manufacturing industry. But there is no oil reserves in Turkey, it said in an amount to meet the needs of their manufacturing production resources are provided through imports. The fact that Turkey's energy import ranks first in its total import and oil imports having the highest share in primary energy demand illustrates the importance of the oil price changes for Turkey. In this study, the effect of changes in oil prices on manufacturing industry is investigated by applying Vector Autoregressive (VAR) model within the scope of time series analysis. As a result of Granger Causality test, a causality relationship was found between oil prices and capacity utilization rate of manufacturing industry and share of manufacturing industry in GDP (Gross Domestic Product). As a result of the variance decomposition analysis, it was found that the manufacturing industry production index was explained by 40% and the manufacturing industry capacity utilization rate by 50%.