THE RELATIONSHIP BETWEEN STRATEGIC SECTOR’S FOREIGN TRADE VOLUME AND REAL EFFECTIVE EXCHANGE RATE MOVEMENTS AND UNCERTAINTY
Öz
Within the framework of Turkey's EU accession negotiations, Republic of Turkey Ministry of Industry and Trade prepared Turkey's Industry Strategy Document in 2010. Exports of most of these sectors, the competitiveness of which were analyzed in this document in accordance with commitments given to the EU, considerably depend on imports. Furthermore, changes in the real exchange rate influence international competitiveness by affecting the relative prices of tradable goods. In this study, the effects of real effective exchange rate movements and uncertainty on foreign trade volume of the sectors, which were analyzed in Turkey's Industry Strategy Document, were investigated in the period of 2005:Q1-2012:Q2. Panel data analysis results show that an increase in the real exchange rate does not significantly decrease exports, while it increases import. Real exchange rate uncertainty affects exports positively in corresponding period; but does not have a significant reducing impact on import volume
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