The effects of transition to free exchange rate system on manufacturing industry exportation in Turkey: VAR approach

Manufacturing Industry is the backbone of Industry and Exportation sectors in Turkey. Similarly, an increase in the exportation of Manufacturing directly contributes to the Industry Sector and indirectly affects the national economy positively.This study analyzes the effects of Free Exchange Rate System that fulfilling in February 2001 to manufacturing industry exportion with VAR approach. In the first chapter of this study, the influence of foreign exchange rates and its policies upon exportation are referred. In the second chapter, the effects of foreign exchange systems once applicated or in practice on exportation in Turkey are discussed. In the third chapter, the methods used in the empirical analysis section of the study are examined. In the last chapter, previous studies on the same subject are reffered and empirical analysis of the study are made.Foreign exchange rates are effective on exportation but not enough by itself. A lot of factors like; the amount of exports in previous years, entry costs, the relationship with the countries we traded to and our technological structureare effective upon the amount of export.In order to increase Manufacturing Industry Exportation, the problems of the exportation companies based on entry costs and taxation should be eliminated, the technology applied in prduction should meet world standards, the major products in world economics shold be concentrated and finally, the political relationship with the countries we traded should be improved.Keywords1. Exchange Rate System2. Turkey3. Manufacturing Industry4. Exportation5. VAR Approach