Export Policies and Export Performance: The Case of Turkey

Abstract The primary purpose of this paper is to make a comparative evaluation of export policies pursued in Turkey during the period from the late 1970s to mid 1990s. In this context the effects of exchange rate policies, export promotion schemes and domestic demand policies are examined. In doing so, the paper attempts to answer, among others, the following question. Do these policies differ in terms of their long term and short term effects? Together with a comparative evaluation of export policies, the answer to this question is given on the basis of long run and short run estimation results of an export supply equation. Long run estimation of the supply equation is done by Johansen?s multivariate cointegration methodology. Short run estimation of the same equation is done by taking into account an error-correction term. In the short term estimation, real exchange rate, investment, excess demand and export subsidies contribute significantly to the explanation of export supply with correct signs. In the long term estimation, similar results are found, with the exception that export subsidies turn out to have a negative effect on export supply. It is explained that the temporary positive effect of subsidies becomes negative in the long-run due to uncertainty not only in exchange rate and demand policies but also in the subsidies themselves.