Relationship Between Economic Growth External Debt: Application to Turkey

Özet

In this study, the effects of foreign debt on economic growth in Turkey’s economy are investigated with contemporary time-series techniques for 1970-2016 periods. In the study, the stationarity of the series is examined by ADF and PP unit root tests and the series were found to be stationary at different levels. The existence of cointegration relationship between the series is examined by the Bounds Testing method and it is determined that external debt and economic growth move together in the long run. In the long-run analysis carried out by ARDL method, it is found that 1% increase in fixed capital stock, labor force, external debt stock and human capital enhance national income by 0,31, 0,27, 0.,13 and 0,46%, respectively. Error correction mechanism of the model operates, that is, the outcomes are reliable. Causality relationships between the series are examined by Toda-Yamamoto causality test and it is found that one-way causality relationships exist from labor and external debt to economic growth. Also in this test; one-way causality relationships are found from the labor force to the fixed capital stock and human capital and from the external debt stock to the human capital.

Abstract

With globalization, transnational transportability increased and trade liberalization became inevitable. This liberalization has also laid the groundwork for many transnational formations. One of these formations is the Eurasian Economic Union, which was established under the leadership of Russia, Kazakhstan and Belarus. Considering geographical location, cultural factors and economic interests, the Eurasian Economic Union has a great importance for Turkey. The aim of the study was to introduce the Eurasian Economic Union and to question the importance of the said Union in Turkey's Foreign Trade Diversification. For this purpose, member states bilateral foreign trade between Turkey and the data for the period of 2010-2019, using export and import growth rates (CGR), index of concentration in bilateral trade (IT) Industry-Concentration Index bilateral trade (SBT) and trade complementarity index (TCI) are analyzed. SITC Rev3 2 digit data was used in sectoral analyses. The findings are evaluated in terms of foreign trade policy and it is concluded that Turkey, which is legally impossible to become a member of the EEA, could benefit from foreign trade diversification by making preferential trade agreements with member states to cover certain products and product groups.