Examination of the Effect of the Economic Globalization on Unemployment Rates for the Turkish Economy
DOI:
https://doi.org/10.5281/zenodo.10049611Keywords:
Economic Globalization, Unemployment, Bayer-Hanck Cointegration Test, TurkeyAbstract
This study aims to analyse the effect of the economic globalization process on unemployment rates for the Turkish economy. For this purpose, we use the Bayer and Hanck (2012) cointegration analysis which takes into account different cointegration tests for the period from 1988 to 2020 and investigate the existence of a long-run relationship between unemployment rates and economic growth, foreign direct investment, trade openness and population in Turkey. The results indicate that all variables have statistically significant coefficients except for foreign direct investment. More specifically, there is a negative relationship between economic growth and trade openness and unemployment rates, and a positive relationship between population and unemployment rates in the long run. Accordingly, increases in economic growth and openness rates reduce unemployment rates in the Turkish economy, whereas increases in population have an accelerating effect on unemployment rates. This means that economic growth and foreign trade performances are important issues in determining unemployment policies for the Turkish economy. On the other hand, it is noteworthy that there is not enough contribution to unemployment rates, especially from foreign direct investments.Finally, the study also examines the causal relationship between series using the frequency domain causality test developed by Breitung and Candelon (2006). Based on the parameters of economic globalization, the causality test results reveal that there is a unidirectional causal relationship from foreign direct investment to unemployment rates in the medium and long run in Turkey.
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