Productivity and terms of trade: Causality analysis for OECD countries

International trade performance is largely related to production performance. Caountries with efficient production processes and logistics networks also have an advantageous position in foreign trade. In this context ve believe that there is a relationship between efficiency and terms of trade which is one of the priority indicators of foreign trade performance. In addition, productivity and foreign trade limits are expected to affect the welfare of countries, In this study, the causality relationship between productivity, terms of trade and welfare was analyzed with the data obtained from 36 OECD countries between 1995 and 2017, with terms of trade and per capita gross domestic product. The established causality model was analyzed by Dumitrescu and Hurlin (2012) Panel Causality Test and a two- way caousality relationship was found between productivity and terms of trade, productivity and prosperitiy. There was a causal relationship from welfare to terms of trade, but no causality from welfare terms of trade. According to the results, various political proposiyions were made. Keywords: Productivity, Terms of Trade, Welfare, Panel Causality Test