Utku Utkulu

Exports, export composition and growth: cointegration and causality evidence for Malaysia

This paper comprehensively tests the export-led growth (ELG) hypothesis for Malaysia for the period 1955 - 90, using cointegration and causality testing based on Hsiaos synthesis of the Granger test and Akaikes minimum final prediction error criterion. The results provide support for the ELG hypothesis; aggregate exports Granger-cause real GDP and non-export GDP. This relationship is found to be driven by manufactured exports rather than by traditional exports.

Trade liberalisation and endogenous growth: Some evidence for Turkey

This paper examines the impact of trade liberalisation on the long-run economic development as measured by the real GDP per capita in Turkey. Based on the ‘endogenous’ growth theory, we employ bivariate and multivariate cointegration analyses to test the long-run relationship among the relevant variables. Results for Turkey suggest a stable, joint long-run relationship among real GDP per capita, an index of trade liberalisation, human and physical capital in accordance with the ‘endogenous’ growth theory. Statistically significant error-correction terms provide further evidence that those variables are indeed cointegrated. This also implies causal effects.

The Turkish Economy: Past and Present

Turkey is typical of a developing country (LDC) in many respects. While generally supporting other LDCs on international economic issues, she has remained an active member of the North Atlantic Treaty Organization (NATO) and the Organization for Economic Cooporation and Development (OECD). She joined the European Community (EC) as an associate member in 1963 on the signing of the Ankara Agreement, and in 1987 applied for full membership, a decision on which was postponed following a discouraging preliminary assessment by the EC Commission. Although a customs union agreement between the European Union (EU) and Turkey was signed in 1995 (valid from 1996), the prospects for full membership still look gloomy. Turkey’s political background has witnessed considerable instability during the last thirty years: a number of changes in the ruling coalitions, three constitutions, and three military interventions (the last one in 1980).

Trade Liberalisation and Economic Development: The Asian Experience — Turkey, Malaysia and India

This paper examines, theoretically and empirically, the impact of trade policy on the long-run output growth rate in the context of the new endogenous growth model. In section II, we describe the old and the new views of the relationships between trade and economic growth. Section III reviews the different ways to measure trade liberalisation. Section IV provides the trade liberalisation experiences of Turkey, Malaysia and India since the 1950s which largely followed different strategies (e.g. inward-looking import-substitution industrialisation (ISI) policies via exchange rate distortions and other protectionist measures in the case of India and Turkey,1 and an open, export-led growth (ELG) strategy as in the case of Malaysia2) to promote physical and human capital accumulation and economic growth. Section IV sets out the cointegration and error-correction techniques to analyse the long-run relationship between an index of exchange rate distortions/trade liberalisation and economic growth of Turkey, Malaysia and India. The data and empirical results are described in section V. The final section draws some conclusions.