Proceedings of Annual Tokyo Business Research Conference
9 - 10 November 2015, Shinjuku Washington Hotel, Tokyo, Japan, ISBN: 978-1-922069-88-7
Long Run and Dynamic Effects of Trade Openness, Financial
Development on Economic Growth in Turkey: ARDL
Approach with Structural Break
Mouyad Al Samara1
This study aims to investigate the relationship between trade liberalization and economic
growth in Turkey for 1960-2014 periods. To this end, this paper uses recent econometric
technique based on bounds testing approach proposed by Pesaran (2001) to analysis the
long run relationship and dynamics effects of trade on real GDP growth in Turkey. In
particularly, this approach will be extended by account for the possible structural breaks
in the cointegration vector as proposed by Hatemi J (2008). Empirical results show
strong evidence for the existence of stable long run relationship in the presence of shift in
the cointegration vector between trade openness, real GDP, financial development and
gross capital formation. Error correction model indicates that 31 percent of the real GDP
adjustment, following a short-run shock, occurs in the following period. Furthermore,
results show that trade openness, capital formation, labor force and financial
development have a dominated long and short run positive effects on real GDP growth
which supports the policies about the benefits trade liberalization.
Key words: Trade Liberalization, Economic Growth, ARDL Approach and Structural
Breaks
JEL Classification: C19, E44, F41
1
Department of Finance and Economic, college of Business and Economics, Qatar University.
P.O. Box: 2713-Doha-Qatar