A model study on the effect of exchange rate volatility on the foreign trade of the Turkish agricultural sector with a structural breakdown

With the financial globalization that started in the world economy since 1980, the liberalization process in the goods market has also started and traditional foreign trade policies have been replaced by new formations. This process has further increased the dependency between countries and revealed a new economic structure. The exchange rate, which is the value of a country against another country's currency, goes beyond being a tool and has become a key phenomenon in international trade, as it has significant effects on the balance of payments. Exchange rate volatility has an important place among the important factors affecting foreign trade on a sectoral basis. Depending on the exchange rate volatility, significant changes can be experienced in the foreign trade of the economies. Many developing economies such as Turkey can be affected positively or negatively by the effect of exchange rate volatility. It is seen that agricultural products are among the items that Turkey is superior to in foreign trade, and the exchange rate uncertainty that arises due to the floating exchange rate regime makes it even more important to determine the course of agricultural foreign trade. There are many studies in the literature dealing with the Turkish agricultural sector and the real exchange rate relationship. However, in this study, besides the total export value of crop production, the relationship of sub-sectors with the real exchange rate has been taken into consideration. In this context, in this study, it was tried to determine the export value of agricultural sub-sectors and the direction of exchange rate volatility. In the study, the total crop production value of the agricultural sector and the export value of the sub-sector were used as the dependent variable, while the real exchange rate was used as the independent variable. The study was based on monthly periods and the range of 2003:01-2022:12 was taken into account. The data set was obtained from the Central Bank of the Republic of Turkey Electronic Data Distribution Site and the Turkish Exporters' Association. Policy recommendations were made in line with the results obtained.