International Journal of Humanities and Social Science

ISSN 2220-8488 (Print), 2221-0989 (Online) 10.30845/ijhss

Does Openness Increase Productivity? Evidence from an Emerging Economy: Turkey
Assoc. Prof. Sahabettin Gunes, Assoc. Prof. Seyit Kose

This study analyzes one of the main postulates of Endogenous Growth Theory, which suggests that international trade openness may speed up growth by favorably affecting productivity. Cointegration and vector error correction model (VECM) procedures are applied on quarterly data set covering the period 2000Q1-2011Q4. The main finding of the paper is that, for the Turkish economy, openness to international trade and manufacturing sector partial productivity are cointegrated and, thus, they cannot drift too far apart. However, we find that -in the Granger sense- causality is unidirectional and runs from productivity to openness, but not vice versa.

Full Text: PDF