The impact of foreign trade on economic growth in Turkey

The concept of economic growth has always been a topic of interest to economists. According to globalization, the relation between economic growth and international trade has been started to attract more attention and there have been conducted several empirical analysis for this topic. The international trade that is defined as sum of export and import is important to provide sustainable economic growth specifically in developing economies and international trade affect the development levels of countries. Today, international trade can be defined as the more important factor for development and globalization. The history of international trade and economic growth that is examined in detail can be divided into two periods in terms of applied industrialization policies. The first period is defined as pre-1980 periods in which import substitution industrialization policies were implemented. The second period is the post-1980 periods when industrialization policies that based on exports have been implemented. The aim of this study is to examine the relation between international trade and economic growth in Turkey by using monthly data for the periods of 1991-2018 and the presence of causality relation among export, import and economic growth is analyzed. The relation between economic growth and international trade can be examined according to two hypotheses that are export led growth hypothesis and growth led trade hypothesis and the direction of causality relation between economic growth and international trade is analyzed. The causality test results indicate that the presence of bidirectional causality relation between export and economic growth. Impulse-responses analysis results suggest that import affects economic growth in the short-run and also the effect of export on economic growth is found to significant in the long-run.