The relationship between export and economic growth: A comparative analysis for Turkey and European Union

This study is carried out to analyze the nexus between export, import and economic growth in Turkey and 5 European Union countries (France, Germany, Italy, Netherlands and Spain) using panel data for the period 2010 to 2020. The justification for choosing this topic or carrying out this study is; because Turkey is an important trading partner with EU countries and a candidate to access EU zone, therefore checking it economic growth and export is important more especially when associated with EU countries. The dependent variable in this study is GDP while the predatory (independent) variables are export and import. The study uses the FMOLS (fully modified ordinary least square) estimation techniques. The Levin-Lin Chu (LLC) and Augmented Dickey Fuller (The Fisher ADF) panel unit root test were used to check the stationarity of the variables and also the Pedroni and Kao panel cointegration test were employed to check the cointegration between the aforementioned variables. The results demonstrated that there is a positive long run relationship between export and economic growth and a change in export will lead to 10.30% increase in GDP in Turkey and the five selected economics of EU (France, Germany, Italy, Netherlands and Spain). The VAR granger causality test confirmed a bidirectional relationship between export and economic growth. Though a long run relationship was established between import and economic growth, the VAR granger causality provide evidence of the causality which runs from GDP to import meaning a one-way direction. This study in a nutshell confirmed the validity of the export led growth bidirectional relationship for the case of Turkey and the selected countries of EU between 2010 and 2020 (last 11 years). The study in the last chapter made some comments on recommendations both to policy makers and future researchers.