Main Article Content
Abstract
Purpose ― In this study, 5 Turkic Republics (Azerbaijan, Kazakhstan, Kyrgyzstan, Uzbekistan and Turkmenistan) and Turkey are analysed to investigate the impact of trade liberalisation and financial development on economic growth.
Methods ― In this study, long-term relationships among trade liberalisation, financial development, and economic growth are analysed by applying unit root, cointegration and causality tests for panel data analysis study for the period 1998 to 2017.
Findings ― The findings reveal a strong cointegration relationship between trade liberalization, financial development, and economic growth. It was understood that trade liberalisation positively affected economic growth, and financial development negatively affected economic growth in the long term for the whole panel. However, when the variables are analysed for each country in the panel, it is seen that the sign and severity of the coefficients change. Also, according to panel causality test results, it was understood that there was no causal relationship between variables.
Implication ― This paper supports the notion that the direction of the relationship among trade liberalisation, financial development, and economic growth change according to countries in Turkey and the Turkic Republics.
Originality ― This paper contributes to the literature by the general view that trade liberalisation and financial development are the driving force of economic growth; these relations may vary according to the country group examined in the studies, the period handled, and the econometric method applied.
Keywords
Article Details
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References
- Üniversitesi İktisadi ve İdari Bilimler Dergisi, 32(1), 155–164.
- Artan, S. (2007). Finansal kalkınmanın büyümeye etkileri: Literatür ve uygulama. İktisat İşletme ve Finans, 22(252), 70–89.
- Asghar, N., & Hussain, Z. (2014). Financial development, trade openness and economic growth in developing countries: Recent evidence from panel data. Pakistan Economic and Social Review, 52(2), 99–126.
- Baltagi, B. (2005). Econometric analysis of panel data (3rd ed.). Chichester: John Wiley & Sons Ltd.
- Breitung, J. (2000). The local power of some unit root tests for panel data. In Badi Baltagi (Ed.), Advances in Econometrics. Amsterdam: JAI Press.
- Breusch, T., & Pagan, A. (1980). The lagrange multiplier test and its applications to model specification in econometrics. Review of Economics Studies, 47(1), 239–253.
- Çevik, E. İ., Atukeren, E., & Korkmaz, T. (2019). Trade openness and economic growth in turkey: A rolling frequency domain analysis. Economies, 7(2), 1–16. https://doi.org/10.3390/economies7020041
- Djalilov, K., & Piesse, J. (2011). Financial development and growth in transition countries: A study of Central Asia. Emerging Markets Finance and Trade, 47(6), 4–23. https://doi.org/10.1016/j.econmod.2012.02.014
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- Estrada, G., Park, D., & Ramayandi, A. (2010). Financial development and economic growth in developing Asia (ADB Economics Working Paper Series No. 233). Retrieved from https://www.adb.org/sites/default/files/publication/28277/economics-wp233.pdf
- Gengenbach, C., Urbain, J.-P., & Westerlund, J. (2016). Error correction testing in panels with common stochastic trends. Journal of Applied Econometrics, 31(6), 982–1004. https://doi.org/10.1002/jae.2475
- Gries, T., Kraft, M., & Meierrieks, D. (2009). Linkages between financial deepening, trade openness and economic development: Causality evidence from sub-saharan Africa. World Development, 37(12), 1849–1860. https://doi.org/10.1016/j.worlddev.2009.05.008
- Gül, E., Kamacı, A., & Konya, S. (2013). Dış ticaretin büyüme üzerine etkileri: Türk Cumhuriyetleri ve Türkiye örneği. Akademik Bakış Dergisi, 35, 1–12.
- Krugman, P. (1980). Scale economies, product differentiation, and pattern of trade. The American Economic Review, 70(5), 950–959.
- Le, T.-H., & Tran-Nam, B. (2018). Trade liberalization, financial modernization and economic development: An empirical study of selected Asia–Pacific countries. Research in Economics, 72(2), 343–355. https://doi.org/10.1016/j.rie.2017.03.001
- Menyah, K., Nazlioglu, S., & Wolde-Rufael, Y. (2014). Financial development, trade openness and economic growth in African countries: New insights from a panel causality approach. Economic Modelling, 37, 386–394. https://doi.org/10.1016/j.econmod.2013.11.044
- Pedroni, P. (2001). Purchasing power parity tests in cointegrated panels. The Review of Economics and Statistics, 83(4), 727–731. https://doi.org/10.1162/003465301753237803
- Pesaran, H. (2004). General diagnostic tests for cross section dependence in panels (Cambridge Working Papers No. 0435).
- Pesaran, M. H., Ullah, A., & Yamagata, T. (2008). A bias‐adjusted LM test of error cross‐section independence. The Econometrics Journal, 11(1), 105–127. https://doi.org/10.1111/j.1368-423X.2007.00227.x
- Silajdzic, S., & Mehic, E. (2018). Trade openness and economic growth: Empirical evidence from transition economies. In V. Bobek (Ed.), Trade and Global Market,. IntechOpen.
- Swamy, P. A. (1970). Efficient inference in a random coefficient regression model. Econometrica: Journal of the Econometric Society, 38(2), 311–323. https://doi.org/10.2307/1913012
- Taylor, M. P., & Sarno, L. (1998). The behavior of real exchange rates during the post-Bretton Woods period. Journal of International Economics, 46(2), 281–312. https://doi.org/10.1016/S0022-1996(97)00054-8
- Tufaner, M. B. (2020). Trade openness, financial development and economic growth in fragile five countries. In M. Özmen (Ed.), Economics Studies (pp. 49–6). Akademisyen Publishing.
References
Üniversitesi İktisadi ve İdari Bilimler Dergisi, 32(1), 155–164.
Artan, S. (2007). Finansal kalkınmanın büyümeye etkileri: Literatür ve uygulama. İktisat İşletme ve Finans, 22(252), 70–89.
Asghar, N., & Hussain, Z. (2014). Financial development, trade openness and economic growth in developing countries: Recent evidence from panel data. Pakistan Economic and Social Review, 52(2), 99–126.
Baltagi, B. (2005). Econometric analysis of panel data (3rd ed.). Chichester: John Wiley & Sons Ltd.
Breitung, J. (2000). The local power of some unit root tests for panel data. In Badi Baltagi (Ed.), Advances in Econometrics. Amsterdam: JAI Press.
Breusch, T., & Pagan, A. (1980). The lagrange multiplier test and its applications to model specification in econometrics. Review of Economics Studies, 47(1), 239–253.
Çevik, E. İ., Atukeren, E., & Korkmaz, T. (2019). Trade openness and economic growth in turkey: A rolling frequency domain analysis. Economies, 7(2), 1–16. https://doi.org/10.3390/economies7020041
Djalilov, K., & Piesse, J. (2011). Financial development and growth in transition countries: A study of Central Asia. Emerging Markets Finance and Trade, 47(6), 4–23. https://doi.org/10.1016/j.econmod.2012.02.014
Dumitrescu, E.-I., & Hurlin, C. (2012). Testing for Granger non-causality in heterogeneous panels. Economic Modelling, 29(4), 1450–1460. https://doi.org/https://doi.org/10.1016/j.econmod.2012.02.014
Erkişi, K., & Ceyhan, T. (2019). Trade liberalization and economic growth: A panel data analysis for transition economies in Europe. Journal of Economics Finance and Accounting, 6(2), 82–94. https://doi.org/10.17261/Pressacademia.2019.1047
Estrada, G., Park, D., & Ramayandi, A. (2010). Financial development and economic growth in developing Asia (ADB Economics Working Paper Series No. 233). Retrieved from https://www.adb.org/sites/default/files/publication/28277/economics-wp233.pdf
Gengenbach, C., Urbain, J.-P., & Westerlund, J. (2016). Error correction testing in panels with common stochastic trends. Journal of Applied Econometrics, 31(6), 982–1004. https://doi.org/10.1002/jae.2475
Gries, T., Kraft, M., & Meierrieks, D. (2009). Linkages between financial deepening, trade openness and economic development: Causality evidence from sub-saharan Africa. World Development, 37(12), 1849–1860. https://doi.org/10.1016/j.worlddev.2009.05.008
Gül, E., Kamacı, A., & Konya, S. (2013). Dış ticaretin büyüme üzerine etkileri: Türk Cumhuriyetleri ve Türkiye örneği. Akademik Bakış Dergisi, 35, 1–12.
Krugman, P. (1980). Scale economies, product differentiation, and pattern of trade. The American Economic Review, 70(5), 950–959.
Le, T.-H., & Tran-Nam, B. (2018). Trade liberalization, financial modernization and economic development: An empirical study of selected Asia–Pacific countries. Research in Economics, 72(2), 343–355. https://doi.org/10.1016/j.rie.2017.03.001
Menyah, K., Nazlioglu, S., & Wolde-Rufael, Y. (2014). Financial development, trade openness and economic growth in African countries: New insights from a panel causality approach. Economic Modelling, 37, 386–394. https://doi.org/10.1016/j.econmod.2013.11.044
Pedroni, P. (2001). Purchasing power parity tests in cointegrated panels. The Review of Economics and Statistics, 83(4), 727–731. https://doi.org/10.1162/003465301753237803
Pesaran, H. (2004). General diagnostic tests for cross section dependence in panels (Cambridge Working Papers No. 0435).
Pesaran, M. H., Ullah, A., & Yamagata, T. (2008). A bias‐adjusted LM test of error cross‐section independence. The Econometrics Journal, 11(1), 105–127. https://doi.org/10.1111/j.1368-423X.2007.00227.x
Silajdzic, S., & Mehic, E. (2018). Trade openness and economic growth: Empirical evidence from transition economies. In V. Bobek (Ed.), Trade and Global Market,. IntechOpen.
Swamy, P. A. (1970). Efficient inference in a random coefficient regression model. Econometrica: Journal of the Econometric Society, 38(2), 311–323. https://doi.org/10.2307/1913012
Taylor, M. P., & Sarno, L. (1998). The behavior of real exchange rates during the post-Bretton Woods period. Journal of International Economics, 46(2), 281–312. https://doi.org/10.1016/S0022-1996(97)00054-8
Tufaner, M. B. (2020). Trade openness, financial development and economic growth in fragile five countries. In M. Özmen (Ed.), Economics Studies (pp. 49–6). Akademisyen Publishing.