THE TRIPLE HELIX: OIL PRICES, TRADE TERMS AND UNEMPLOYMENT: A DEVELOPMENTAL ANALYSIS OF TURKIYE

Year 2023, Volume: 10 Issue: 4, 203 - 216, 31.12.2023

Gülgün Çiğdem , Atilla Aydın , Süreyya İmre , Nuran Akdag

Abstract

Purpose- This study delves into the intricate dynamics surrounding oil prices, terms of trade, and unemployment, pivotal factors exerting profound effects on the developmental trajectories of developing countries.
Methodology- Employing the Vector Autoregressive Model and Granger Causality Test, the research scrutinizes data spanning from 1980 to 2021, with a focus on Turkey as a case study. Granger causality analysis reveals bidirectional causality between terms of trade and unemployment as well as between oil prices and unemployment.
Findings The findings underscore the significance of targeted policies to address challenges in developing nations. Strategies aimed at reducing energy dependence, diversifying energy sources, and implementing strategic foreign trade planning emerge as crucial components to steer these countries toward sustainable development. Furthermore, the study advocates for the implementation of employment policies to effectively tackle unemployment rates.
Conclusion- The reciprocal relationships observed between these variables highlight the need for comprehensive and multifaceted approaches to address the intricate interplay of economic factors influencing the developmental processes of developing countries. The insights gleaned from this research not only contribute to a nuanced understanding of these relationships but also provide a foundation for informed policy recommendations to promote robust and sustainable development in developing nations.

Keywords

Oil, terms of trade, unemployment, vector auto regressive model, Granger Causality

References

• Abugamea, G. (2018). Determinants of Unemployment: Empirical Evidence from Palestine (No. 89424). University Library of Munich, Germany.
• Adeosun, O. A., Olayeni, R. O., Tabash, M. I., Anagreh, S. (2023). The dynamics of oil prices, uncertainty measures and unemployment: a time and frequency approach. China Finance Review International, 13(4), 682-713.
• Alkhateeb, T. T., Mahmood, H., Sultan, Z. A., & Ahmad, N. (2017). Oil price and employment nexus in Saudi Arabia. International Journal of Energy Economics and Policy, 7(3), 277 - 281.
• Altinay, G., & Karagol, E. (2005). Electricity Consumption and Economic Growth: Evidence from Turkey. Energy Economics, 27, 849-856.
• Ananjeva, N.B. (2023). Oil price uncertainty and unemployment dynamics: Nonlinearities matter. Energy Economics, 106806-106806.
• Belenky, M., Riker, D. (2015). Theory and empirical evidence linking international trade to unemployment rates. Journal of International Commerce and Economics, 5(3), 166-181.
• Beşer, N. Ö. (2019). The effect of oil prices on foreign trade deficit in the economics of Bulgaria. Theoretical and Applied Economics, 26(3), 159-170.
• Bildirici, M., Özaksoy Sonüstün, F. (2019). Chaotic structure of oil prices, inflation, and unemployment. Nonlinear Dynamics, Psychology, and Life Sciences, 23(3), 377-394.
• Bjornland, H.C. (200b0) The dynamic effects of aggregate demand, supply and oil price shocks: a comparative study. The Manchester School, 68(5), 578-607.
• Brancaccio, G., Kalouptsidi, M., Papageorgiou, T. (2022). The impact of oil prices on world trade. Review of International Economics, 31(2), 444-463.
• Caligagan, Angelica Anne M, Ching, R. R., & Suin, Kristine April. (2022). An analysis on the economic factors affecting the unemployment rate in the Philippines from 1993-2018. Journal of Economics, Finance and Accounting Studies, 4(2), 01–17.
• Cütcü, İ., Cenger, H. (2017). The relationship between foreign trade and unemployment in Turkey: time series analysis with structural breaks. III. International Entrepreneurship, Employment and Career Congress, October 12-15, 2017, Muğla, Türkiye.
• Çil Yavuz, N. (2015). Financial Econometrics. Istanbul: DER Publications.
• Dutt, P., Mitra, D., & Ranjan, P. (2009). International trade and unemployment: Theory and cross-national evidence. Journal of International Economics, 78(1), 32-44.
• Ersungur Ş. M. Özdemir D., Tığtepe E. (2021). The effect of foreign trade on employment: a panel data analysis on OECD countries. Atatürk University Journal of Economics and Administrative Sciences, 35(4), 1335-1368.
• Fernandez., K.M., Jha., K., & Jam’an., N.F. (2011). Oil price fluctuations and macroeconomic performance in Asian and Oceanic economies. Retrieved from http://hdl.handle.net/10356/44331
• Granger, C. W. (1969). Investigating causal relations by econometric models and cross-spectral methods. Econometrica, 424-438.
• Gujarati, N. (2006). Basic Econometrics. Istanbul: Literatür Publishing.
• Gibson, B. (2011). Assessing the impact of trade on employment. Trade and Employment: From Myth to Facts, https://citeseerx.ist.psu.edu/document?repid=rep1&type=pdf&doi=62ed8bf9f086596054386253feb975f4678a2a70
• Gül, E., Kamacı, A. (2012). The effects of foreign trade on employment: A panel data analysis. 4(3), 81-91.
• Hung, L. W., Peng, S. K. (2019). Unemployment with trade and firm heterogeneity. International Journal of Economic Theory. 16(1), 62-81.
• Jin, C., Lee, S., Hwang, J. (2019). The impact of import and export on unemployment: a cross-national analysis. International Journal of Sustainable Economy, 11(4), 347-363.
• Nanovsky, S. (2019). The impact of oil prices on trade. Review of International Economics, 27(1), 431-447.
• Nguyen, A.T. (2022). The relationship between economic growth, foreign direct investment, trade openness, and unemployment in South Asia. Asian Academy of Management Journal, 27(2), 21–40.
• Nwosa, P., Keji, J., Adegboyo, S., Fasina, O. (2020). Trade openness and unemployment rate in Nigeria. Oradea Journal of Business and Economics, 5(2), 52-62.
• Ordóñez, J., Monfort, M., Cuestas, J. C. (2019). Oil prices, unemployment and the financial crisis in oil-importing countries: The case of Spain. Energy, 181, 625-634.
• Özdemir, Z., Doğaner, A., Çetin, G. (2022). Economic growth and carbon relationship: the case of Germany. Journal of Süleyman Demirel University Faculty of Economics and Administrative Sciences, 27(3), 509-521.
• Perstenyova, N. P., Zaychikova, N. A. (2021). Analyzing Oil Prices Impact on Russian Foreign Trade. In: Ashmarina, S.I., Horák, J., Vrbka, J., Šuleř, P. (eds) Economic Systems in the New Era: Stable Systems in an Unstable World. IES 2020. Lecture Notes in Networks and Systems, vol. 160. Springer, Cham. https://doi.org/10.1007/978-3-030-60929-0_90
• Raifu, I. A., Aminu, A., Folawewo, A. O. (2020). Investigating the relationship between changes in oil prices and unemployment rate in Nigeria: linear and nonlinear autoregressive distributed lag approaches. Future Business Journal, 6, 28-41.
• Senzangakhona, P., & Choga, I. (2015). Crude Oil Prices and Unemployment in South Africa: 1990 – 2010. Mediterranean Journal of Social Cciences, 6(2), 407.
• Sevüktekin, M., Çınar, M. (2017). Econometric Time Series Analysis. Bursa: Dora Publishing.
• Shuddhasattwa, R., Ruhul, S., Pasquale, M. S. (2018). Energy, unemployment, and trade. Applied Economics, 50(47), 5122-5134.
• Sinan, B. (2018). International oil prices in Turkey: 1980-2016. Journal of Finance, Economics and Social Research, 3(4), 681-695.
• Trang, N. T. N., Tho, T. N., & Hong, D. T. T. (2017). The impact of oil price on the growth, inflation, unemployment, and budget deficit of Vietnam. International Journal of Energy Economics and Policy, 7(3), 42-49