The Impact Of Industrial Production On Economic Growth: New Empirical Evidence For Turkiye In A Material Development Framework

Ali Do\u{g}du and Murad Kayacan

Papers from arXiv.org

Abstract: There are different views in the literature regarding economic growth and development. Growth and development hypotheses have been addressed from many different perspectives. It is aimed to examine the view of production with the Heavy Industry Initiative proposed by Prof. Dr. Necmettin Erbakan a crucial part of Material Development in T\"urkiye. In this context, an examination has been conducted on GDP, Mining, Manufacturing, Energy, and Chemical Industry Productions in T\"urkiye between 1995-2023, focusing on percentage changes. The stationarity of our data set has been checked, and a VAR estimation has been performed by determining the lag length. Long-term relationships have been identified through the Johansen Cointegration test, and after confirming that there are no issues of autocorrelation and changing variance, variance decomposition has been carried out. Thus, inferences have been made regarding the effects of the identified sectors on GDP. Based on the analysis results, it has been observed that there is a stronger relationship between GDP and the Manufacturing Sector compared to the Mining, Energy, and Chemical Sectors, and it has been concluded that sectoral shocks diminish over time. Additionally, VAR Impulse-Response Analysis has been conducted among the variables. In this context, it has been observed that the variables in the dataset have an impact on each other in both the short and long term. It has been concluded that the shocks were more pronounced in the initial periods, while the economy reached a balance over time. In this regard, it has been confirmed that the heavy industry initiative exhibited different responses sectorally, while also being significant in terms of economic growth and development.

Date: 2025-03, Revised 2025-03
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