Dutch disease in Turkey: An analysis from the construction industry perspective

Dutch Disease is a term which represents the economic process that is claimed to be caused by the current production factors in a country with a sudden source of enrichment to a single sector, resulting in the stagnation or exclusion of other sectors. The main causes of Dutch disease, which first appeared in the 1960s with the invention of natural gas in the Netherlands, are not limited to natural gas. At this point, the factors that cause the Dutch Disease can be listed in three items, the first of which is natural resource discovery and includes natural gas, oil and precious metals. However, another factor that may cause this problem is due to the goods and services sector, which is the subject of trade, which stands out in the manufacturing and industrial sectors. Nevertheless, another element that can cause this problem is caused by the tradable goods and services sector, in which the manufacturing and industrial sectors stand out. In addition, the non-tradable goods sector, which includes sub-sectors such as construction, health, education, is also evaluated within the framework of the elements that cause the presence of Dutch Disease. The main motivation for writing this thesis is to observe how the rapid growth in the construction sector in Turkey in recent years has affected the industrial sector and to reveal whether the industry has been influenced by Dutch Disease based on the construction sector. For this purpose, panel data analysis method was used in the light of data obtained from The Turkish Statistical Institute for 26 sub-regions on the Level 2 scale covering the years 2009-2017. In the model created, the level of industrial employment represents the dependent variable, while the independent variables are listed as foreign trade volume, number of construction initiatives, GDP and total employment. According to the results of the analysis, every 1% increase in the number of construction initiatives increases industrial employment by 0.36%, which indicates that there is no Dutch Disease caused by the construction sector in Turkey.