Measuring And Analyzing the Influence of International Trade on Economic Growth in Turkey for The Period (1985-2022) Evidence from The ARDL Approach
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Abstract
International trade, the exchange of goods and services between countries, plays a crucial role in driving economic growth. By opening up markets, it allows countries to specialize in the production of goods and services they are most efficient at, leading to increased productivity and innovation. This, in turn, boosts real Gross Domestic Product, enhancing the overall economic health, standard of living, and wealth of a nation. The research investigates the effect of international trade on Turkey's economic growth for the period 1985 to 2022. By using the ARDL approach, the study meticulously evaluates the long- and short-term impact of international trade and foreign direct investment (FDI) on economic growth. Despite liberalization efforts aimed at enhancing Turkey's integration into the global economy, our findings reveal a consistent negative influence of international trade on economic growth. This adverse impact is largely attributed to chronic trade deficits, which occur when a nation imports more products and services than it exports, structural economic vulnerabilities, fluctuations in currency value, and competitive disadvantages in main industrial sectors. Based on these results, the study recommends targeted economic reforms. Policymakers should refine trade policies to manage trade deficits, enhance industrial competitiveness and productivity, stabilize the currency, and promote technological advancements and skills development. These recommendations aim to optimize Turkey's trade strategy, leveraging global economic integration to promote growth.
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