The Nexus of Structural Change, Trade Openness, Renewable Energy and Economic Growth in Turkiye, 1970-2020

Abstract

Purpose: This paper aims to investigate the effects of structural change, trade openness, and renewable energy on economic growth in Türkiye. Design/Methodology: Structural change is defined as the shift of resources from the agricultural sector to the industrial sector and then to the services sector. In the structural change process, it is accepted that the manufacturing industry is the engine of growth. However, since the mid-1970s, especially in the post-1980 period, the manufacturing industry has lost its importance. In addition, trade liberalisation and energy policies came to the fore in this process. In this context, this paper analyses the determinants of economic growth within the framework of the structuralist approach. For this, we apply the ARDL bounds test approach and apply FMOLS, DOLS, and CCR for robustness check. Findings: According to the ARDL bounds test results, the manufacturing industry, renewable energy, and trade openness affect economic growth positively; however, the coefficient of renewable energy is statistically insignificant. The results of the robustness check (FMOLS, DOLS, and CCR) also confirm these findings. The effect of the manufacturing industry on economic growth is greater than that of other variables. Limitations: To analyse the impact of structural change on economic growth in the Türkiye, the study is limited to the period 1970-2020. Originality/Value: The originality of our paper is that it analyses the impact of structural transformation (such as the manufacturing industry, trade openness, and renewable energy) on long-run economic growth in Türkiye.