Long term relationship between medical and pharmaceutical products foreign trade balance and current account balance: The case of Turkey

The medicinal and pharmaceutical products sector is a very important sector in the contributions it provides to the national economy. Turkey is a developed country in the medicinal and pharmaceutical products sector in terms of its production standards, technology, product variety, production capacity, and foreign trade volume. In this study, it is aimed to examine the long-term relationship between the medicinal and pharmaceutical products trade balance and the current account balance in Turkey. The dataset in the analyses, in which the variables of medicinal and pharmaceutical products trade balance and current account balance have been used, covers the period of 1975-2020 and consists of the annual data. As a result of the analyses, it has been determined that the series are I(1) stationary at the first difference according to the ADF unit root test and the PP unit root test, and that the series are co-integrated according to the Engle-Granger co-integration test. In addition, it has been concluded that the medicinal and pharmaceutical products trade balance has no significant effect on the current account balance in the short run, whereas the medicine and pharmaceutical products trade balance is the cause of the current account balance in the long run.