Exports and Economic Growth of Turkey: Co-integration and Error Correction Analysis

ABSTRACT: This paper employs modern econometric time series methods such as cointegration and error-correction to analyze the dynamic relationship between export growth and economic growth in Turkey, using quarterly data from 1980 to 2004. From the theoretical point of view, the export growth should contribute positively to economic growth. In fact, this point is the rational behind the export-led growth hypothesis. The empirical research conducted here shows that a uni-directional long term causality exists from export growth to economic growth in Turkish Economy. In terms of error correction models, there is evidence for short-run Granger causality running from export growth to economic growth. However, there is as well evidence for short-run causality running from economic growth to export growth