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Economics of Planning

, 37:245 | Cite as

Does Trade Liberalization Cause a Long Run Economic Growth in Turkey

  • Utku Utkulu
  • Durmus Özdemir
Article

Abstract

Based on ‘endogenous’ growth theory, the paper examines the effect of trade liberalization on long-run income per capita and economic growth in Turkey. Although the presumption must be that free trade has a beneficial effect on long run growth, counter examples can also be found. This controversy increases the importance of empirical work in this area. Using the most recent data we employ multivariate cointegration analysis to test the long run relationship among the variables in hand. In a multivariate context, the effect of determinants such as increasing returns to scale, investment in human and physical capital are also included in both theoretical and empirical works. Our causality evidence between the long run growth and a number of indicators of trade liberalizations confirms the predictions of the ‘new growth theory’. However, the overall effect of the possible breaks and/or policy change and unsustainability in the 1990s looks contradictory and deserves further investigation.

Key words

economic growth openness Turkey 

JEL Classification Numbers

F43 024 052 C5 

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Copyright information

© Springer 2005

Authors and Affiliations

  • Utku Utkulu
    • 1
  • Durmus Özdemir
    • 2
  1. 1.Department of EconomicsDokuz Eylül UniversityTurkey
  2. 2.Department of EconomicsIstanbul Bilgi UniversityIstanbulTurkey

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