EXAMINING THE EFFECT OF FOREIGN TRADE AND EXTERNAL DEBT ON ECONOMIC GROWTH WITH ECONOMETRIC MODELS: THE EXAMPLE OF TURKEY

Abstract

With the increase in international trade relations with globalization, liberalization has been experienced in foreign trade. In general terms, it can be said that foreign trade is an international exchange of goods. In addition, service trade, investment income-expenses, current transactions, and import-export are also among foreign trade items. Import and export constitute the basis of foreign trade.

This study, it is aimed to analyze the effect of foreign trade and external debt on economic growth in the 1990-2019 periods by using the time series analysis method. In this context, firstly, the stationarity of the series was tested with the ADF unit root test, and then the long-term relationship between the variables was tried to be determined by applying the Engle-Granger and Gregory-Hansen cointegration tests. In addition, whether there is a causal relationship between the variables was examined by Granger causality and Toda-Yamamoto causality tests. As a result of the analysis, it has been determined that there is a long-term relationship between the variables of foreign trade and foreign borrowing and the variable of economic growth. In addition, according to the two causality tests, no causality relationship is observed between economic growth and external debt; According to the Granger test, a bidirectional causality relationship was observed between economic growth and foreign trade, and a unidirectional causality relationship was observed only from foreign trade to economic growth according to the Toda-Yamamoto test.