EuroEconomica, Vol 28, No 2 (2011)

Abstract

The aim of this study is to investigate the role of international trade on the economic growth of Turkish economy for the period of 1998-2010. Augmented Dickey Fuller (ADF) and Phillips-Perron (PP) tests indicate that the variables of the study are stationary in their first differences. Granger causality and cointegration techniques were employed to test the direction of causality between gross domestic product, exports and imports. The results suggest that there is bidirectional causality relationship between imports and gross domestic product and one-way causality relationship from gross domestic product to exports. Furthermore, the results also reveal the existence of a one one-way causality relationship from imports to exports. As a conclusion, the findings support “import-led growth” and “growth-driven export” hypotheses for Turkish economy.