The effect of ımports on economic growth: Feder-Ram model

Whether the imported goods and their sub-items have impact on economic growth comes out as a subject questioned and investigated lately. The purpose of this study is to investigate whether imports and their sub-items are directly or indirectly effective on national income and therefore on economic growth by econometric models.In the study, variables of sub-items of imports and total imports by the standard international trade classification and large economic categories classification, GDP, gross fixed capital formation, population growth rate and the rate of the age group of 15-64, representing potential workforce, to total population for the period 1980-2009 are used. Stationarity of the variables are investigated using ADF and PP tests, direct and indirect effects of imports on national income and economic growth are investigated using Feder-Ram model, causality between variables is investigated using VAR analysis, the Granger causality and variance decomposition analyses.The results show that the direct effect coefficient for imports of foodstuffs is positive and statistically significant. Nonetheless, it is determined that coefficients for imports of machinery and transport equipment imports, and processed materials are negative and statistically insignificant. When the indirect effects are analysed, the coefficients for total imports, imports of machinery and transport equipment, imports of processed materials, imports of chemical industry and related industrial products, and imports of a variety of manufactured goods are found to be positive and statistically significant. The results of VAR, Granger causality and variance decomposition analysis show the two-way causality relationship among imports of machinery and transport equipment, imports of investment goods and the national income.