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3rd International Conference on New Trends in Econometrics & FinanceAPRIL 28-29, 2017, HELSINKI, FINLAND

PROCEEDING BOOK

3rd International Conference on New Trends

in Econometrics & Finance

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28-29.04.2017Original Sokos Hotel Presidentti, Helsinki/Finland

http://www.icntefconference.com/

ISBN : 978-605-030-558-6

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ICNTEF’2017

3rd International Conference on New Trends in Econometrics &Finance Helsinki/Finland

Published by the ICNTEF Secretariat

Editors:Prof. Dr. Sevin UĞURAL

Prof. Dr. Mehmet BALCILAR

ICNTEF SecretariatBüyükdere Cad. Ecza sok. Pol Center 4/1 Levent-İstanbul

E-mail: [email protected]://www.icntefconference.com

Conference organised in collaboration with Monre Tourism and Organization

Copyright @ 2017 AIOC and AuthorsAll Rights Reserved

No part of the material protected by this copyright may be reproduced or utilized in any form or by any means electronic or mechanical, including

photocopying , recording or by any storage or retrieval system, without written permission from the copyrights owners

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SCIENTIFIC COMMITTEEProf. Dr. Antonio Rodriguez ANDRESCamilo Jose Cale University, Spain

Prof. Dr. Mehmet BALCILAREastern Mediterranean University, North Cyprus

Prof. Dr. Glenn Paul JENKINSEastern Mediterranean University, North Cyprus

Prof. Dr. Mehmet IVRENDİEastern Mediterranean University, North Cyprus

Prof. Dr. Agamirza BASHIROVEastern Mediterranean University, North Cyprus

Prof. Dr. Rangan GUPTAUniversity of Pretoria, South Africa

Asst. Prof. Dr. Danbala DANJUBank of Agriculture, Nigeria

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ORGANIZATION COMMITTEEProf. Dr. Sevin UguralEastern Mediterranean University, North CyprusConference Chair

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Dear Colleagues,Eastern Mediterranean University Economic Research Center announces the 3rd International Conference on New Trends in Econometrics and Finance (ICNTEF’17 ) which will be held at Helsinki between April 28-29, 2017.

Like the previous two conferences, this conference serves as a forum for academics, practitioners, and central bank and government officials in Europe and all over the world to present and discuss research results about the evolution of the international economics and of the global financial system.

In the conference emphasis will be placed on the developments in emerging market economies, on the fate of the recent trends and of the impact of these developments on international trade, finance and regulation as well as on national economies and financial systems. Theoretical, empirical and policy-oriented papers are all welcome.

The organizers encourage submissions of papers and posters on any topic within the overall theme of the conference and in the following areas in particular:

EconometricsEconomicsEconomic PoliciesInternational EconomicsMacroeconomicsMicroeconomicsIndustrial economics and regional economic issues

FinanceRisk ManagementFinancial MarketsFinancial CrisesQuantitative Finance

All papers will be published in Conference Proceedings Book

We kindly wait for your participation in our conference in Helsinki, to be held in April 28-29, 2017, with the expectations to realize a fruitful discussion ground together with enjoying its social activities and hoping to leaving a trace on your memories.

Hoping to seeing you all in Helsinki.

With my kindest regards

Prof. Dr. Sevin UguralEastern Mediterranean University, North CyprusConference Chair

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SCIENTIFIC PROGRAM

27 APRIL 2017 15:00 – 18:00 : REGISTRATION

28 APRIL 201708:30-17:00 : REGISTRATION

MAIN HALL : GRAND OPENING CEREMONY09:30 – 10:00 : CONCERT / Live Performance by Young Musicians

10:00 –10:20 B R E A K

HALL 1

10:20 – 11:20Welcome Speech : Prof. Dr. Sevin UĞURAL / Eastern Mediterranean University

ICNTEF Conference Chair

KEYNOTE SPEAKER :Prof.Dr. NARAYANASWAMY BALAKRISHNANTitle: Cure rate models and applications

11:20 –11:40 B R E A K

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HALL 1 / SESSION A SESSION

CHAIRFernando LÓPEZ-BLÁZQUEZ

TIME TITLE PRESENTER11:40 – 12:00 ERGODIC THEOREM FOR CENTRAL AND

INTERMEDIATE ORDER STATISTICSAnna DEMBINSKA

12:00 – 12:20 MODEL-ASSISTED ESTIMATION OF SMALL AREA ADDITIVE PARAMETERS

Domingo MORALESMaría Dolores ESTEBANMaría del Mar RUEDA

12:20 – 12:40 NON-HOMOGENEOUS POLYA-AEPPLI PROCESS

Leda MINKOVA

12:40 – 13:00 SOME MODELS IN RELIABILITY OF COMPLEX SYSTEMS

Ismihan BAYRAMOGLU

13:00 –14:00 LUNCH

HALL 1 / SESSION B SESSION

CHAIRMAN HO LING

TIME TITLE PRESENTER14:00 – 14:20 BAYESIAN POISSON-HIDDEN MARKOV

MODELCeren Eda CAN

Serpil AKTAŞ ALTUNAY14:20 – 14:40 ANALYSIS OF SEMIPARAMETRIC MIXED

HIDDEN MARKOV MODEL WITH LONGITUDINAL DATA

Kai KANGJingheng CAI

Xinyuan SONG14:40 – 15:00 BAYESIAN REGULARIZED MULTIVARIATE

GENERALIZED LATENT VARIABLE MODELXiangnan FENG

Haotian WUXinyuan SONG

15:00 – 15:20 SAMPLE SIZE REQUIREMENTS UNDER DIFFERENT LEVELS OF RELIABILITY FOR

LATENT VARIABLE STRUCTURAL EQUATION MODELING

Gülhayat GÖLBAŞI ŞİMŞEKElif ÖCÜT

15:40 –16:00 C O F F E E / T E A B R E A K

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HALL 1 / SESSION CSESSION CHAIR

SEVİN UĞURAL

TIME TITLE PRESENTER16:00 – 16:20 TWIN DEFICIT PROBLEM AND FELDSTEIN

HORIOKA HYPOTHESIS: THE ANALYSIS OF PANEL COINTEGRATON ON G-7 COUNTRIES

Füsun ÇELEBİ BOZ

16:20 – 16:40 MARKET CRASHES AND INVESTORS’ ANTICIPATIONS

Patrick LEONI

16:40 – 17:00 THE IMPACT OF TECHNOLOGY AND SCIENCE ON CO2 EMISSIONS: THE CASE OF

OECD

Erhan İŞCANNeşe ALGANDuygu SERİN

17:00 – 17:20 Am I Using the Right Data? Sıdıka Başçı

29 APRIL 201709:00 - 17:00 : REGISTRATION

09:10 – 09:50KEYNOTE SPEAKER : Prof.Dr. NARAYANASWAMY BALAKRISHNAN

Title: Meta Analysis of Censored Data

09:50 –10:00 B R E A K

HALL 1 / SESSION D SESSION

CHAIRSEVİN UĞURAL

TIME TITLE PRESENTER10:00 – 10:20 ASSESSMENT OF THE RELATIONSHIP

BETWEEN THE PATENT APPLICATIONS BY RESEARCHERS, INSTITUTIONS AND

INVESTMENT IN EDUCATION: CASE OF TURKEY

Müjgan DENİZ

10:20 – 10:40 MARKOV SWITCHING RISK AVERSION AND ASYMMETRIES AT THE ZERO LOWER

BOUND

Riyad ABUBAKER

10:40 – 11:00 ENDOGENEITY AND NONLINEARITY IN THE ENVIRONMENTAL KUZNETS CURVE: ACONTROL FUNCTION APPROACH

Sinem Güler Kangallı UYAREbru CAGLAYAN AKAY

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11:00 –11:20 C O F F E E / T E A B R E A K

HALL 1 / SESSION E SESSION CHAIR

SEVİN UĞURAL

TIME TITLE PRESENTER11:20 – 11:40 BEYOND THE 2008 FINANCIAL CRISIS: THE

NEW POLITICAL ECONOMY OF THE FOREIGN PAYMENT ISSUES IN TURKEY

Niyazi ÖZKER

11:40 – 12:00 EFFICIENT FRONTIER APPROACH TO DETERMINE PERFORMANCE OF

INDIVIDUAL PENSION FUND COMPANIES: EVIDENCE FROM TURKEY

Umut UYARHakan AYGOREN

Goksal Selahatdin KELTEN

12:00 – 12:20 INSTITUTIONAL QUALITY, PUBLIC DEBT AND GROWTH IN EUROPE: A DYNAMIC

PANEL THRESHOLD APPROACH

Zühal KURUL

12:20 – 12:40 PASS-THROUGH FACTORS OF THE INFLATION RATE IN NORTH CYPRUS

Kemal BAĞZIBAĞLI

13:00 –14:00 LUNCH

HALL 1 / SESSION F SESSION

CHAIRDOMINGO MORALES

TIME TITLE PRESENTER14:00 – 14:20 COMPARISON OF THE COPULAS BY THE BI-

QUANTILE METHOD BASED BIVARIATE RISK MEASURES

Emel KIZILOK KARAÖmer GEBİZLİOĞLU

14:20 – 14:40 THE NUMBER OF GEOMETRIC RECORDS in PARETO SAMPLES

Fernando LÓPEZ-BLÁZQUEZ Begoña SALAMANCA-MIÑO

14:40 – 15:00 ON PARAMETER ESTIMATION OF KUMARASWAMY-G DISTRIBUTIONS FOR PROGRESSIVE TYPE-II CENSORING USING

THE EM-ALGORITHM

Güvenç ARSLANSevgi Yurt ÖNCEL

15:00 – 15:20 DISTRIBUTION OF THE SECOND UPPER RECORD STATISTICS FROM BIVARIATE

SAMPLE

Gülder KEMALBAY

15:20 – 15:40 NEW ROBUST STATISTICAL PROCEDURES FOR POLYTOMOUS LOGISTIC REGRESSION

MODELS

Elena CASTILLAAbhik GHOSH

Nirian MARTINLeandro PARDO

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15:40 –16:00 C O F F E E / T E A B R E A K

HALL 1 / SESSION G1SESSION CHAIR

Eugenia STOIMENOVA

TIME TITLE PRESENTER16:00 – 16:20 POINTWISE VARIANCES AND

COVARIANCES OF ESTIMATORS OF PRINCIPAL COMPONENTS

Kee Hoon KANG

16:20 – 16:40 INTEGRATING INDEPENDENT COMPONENT ANALYSIS and ARTIFICIAL NEURAL

NETWORKS in FINANCIAL TIME SERIES

Nurbanu BURSAHüseyin TATLIDİL

16:40 – 17:00 A NOVEL MODEL SELECTION ALGORITHM FOR TIME SERIES

Elif AKÇACeylan YOZGATLIGİL

HALL 1 / SESSION G2 - POSTERSESSION

CHAIREugenia STOIMENOVA

TIME TITLE PRESENTER17:00 – 17:30 USING STATISTICAL TECHNIQUES FOR

INTERNET SURVEYSZerrin AŞAN GREENACRE

Md Musa KHAN

18:00 –21:00 CITY TOUR

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ContentsTHE IMPACT OF INFORMATION AND COMMUNICATION TECHNOLOGY ON CO2 EMISSIONS: THE CASE OF OECD...................................................................................................................................................

Assoc. Prof. Dr. Neşe ALGAN, Assist Dr. Erhan İŞCAN, Ph.D. Candidate Duygu SERİN..........................14

ASSESSMENT OF THE RELATİONSHİP BETWEEN THE PATENT APPLİCATİONS BY RESEARCHERS, INSTİTUTİONS AND INVESTMENT İN EDUCATİON: CASE OF TURKEY.......................................................

Müjgan DENİZ , Kutluk Kağan SÜMER..................................................................................................23

BEYOND THE 2008 FINANCIAL CRISIS: THE NEW POLITICAL ECONOMY OF THE FOREIGN PAYMENT ISSUES IN TURKEY.....................................................................................................................................

Niyazi ÖZKER........................................................................................................................................35

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THE IMPACT OF INFORMATION AND COMMUNICATION TECHNOLOGY ON CO2 EMISSIONS: THE CASE OF OECD

Assoc. Prof. Dr. Neşe ALGAN1, Assist Dr. Erhan İŞCAN 2 , Ph.D. Candidate Duygu SERİN3

1Cukurova University, FEAS, Department of Economics, Adana, [email protected] University, FEAS, Department of Economics, Adana, [email protected]

3Cukurova University, Institute of Social Sciences, [email protected]

AbstractInformation and Communication Technologies refer to electronic equipment and related software to convert, store, and process, communicate and retrieve digitized information. This includes technology, equipment, software and service elements and both technology infrastructure and end-user devices. In other words, information and communication technology applications may cover both technology products, components and information and communication technology based services. In the literature many studies analyzed the impacts of information and communication technology on economy but beside these impacts only few of the literature analyzed the impact of information and communication technology usage to increase energy efficiency for eliminating the carbon emissions to mitigate the climate change. Increase in the usage of information and communication technology can effect on carbon emissions in three ways. First, direct emissions associated with information and communication technology production, use and disposal. Second, technologies facilitate emission reductions in other industries due to the use of specific factors. Third, technologies for monitoring and managing processes or for dematerializing products decrease the usage of energy by saving. Information and communication technology usage reduces transportation costs or process costs and increases productivity and energy efficiency, and thus this contributes to the reduction of carbon emissions while leading to economic growth. On the other hand, in the literature some of the studies supported the technological progress-led policy framework to mitigate climate change. Research and development expenditure is the main promoter of the technological progress. Especially, increasing research and development expenditure promotes the progress of the low-carbon technologies. Technological progress increases the efficiency and with these low-carbon technologies the carbon emissions will decrease. In short, improving technology by research and development expenditure will mitigate the climate change. Although the literature of the impact of technological progress and information and communication technology on economic growth has increased but the impact of them on carbon emissions reduction has not been examined in depth and its effect is broadly unknown. Therefore, the aim of this study is to analyze relationship between information and communication technology and carbon emissions, using dynamic panel method. It is different from most literature from a perspective of information and communication technology because a research and development expenditure variable is included in the model. For that purpose, we used a data set of selected The Organization for Economic Co-operation and Development countries between the periods 2003-2014. The data for all countries obtained from the World Bank’s Development Indicators. As a conclusion it is found that information and communication technology and research and development expenditure have positive and statistically significant effect on reducing carbon emissions for selected countries. This empirical finding contributed to advancing the existing literature, and also draws special attention of policymakers. Based on the findings, policy makers should change their policy for economic growth by using technology for reducing carbon emissions to mitigate climate change.© 2017 Selection and/or peer-review under responsibility of the organization committeeKey Words: Information and Communications Technology; Research and Development; Carbon Emissions; Dynamic Panel Data Analysis; OECD Countries

IntroductionClimate change is the common value of all countries in the world for the last two decades.

For this reason, climate change and environmental problems have much more importance on a global scale. One of the international frameworks for the fight against global warming and climate change is the Kyoto Protocol. The signatories of the protocol promise for reducing the emissions of carbon dioxide and five other gases that cause greenhouse effect. Therefore the countries seek for the different ways for decreasing the emissions.

Information and communication technologies are closely related to the amount of carbon emissions because of decreasing the need for energy sources. Information and communication technologies can be understood as all technologies, including the collection, processing, storage, and transmission of information from one place to another via information networks. These technologies include hardware and software tools that run on computers, computer

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networks, satellite antennas, fiber optic cables and microwave transmitters, and individuals who have educational, teaching and education at different levels [13].

Today, information and communication technologies have an important place in almost all fields. Besides, information and communication technologies, which are seen as solutions to many fundamental problems in human life, increase energy efficiency and reduce the effects of carbon dioxide (CO2) emissions and climate change. In the last two decades, as one of the most important environmental problems affecting humanity, it is necessary to use information and communication technologies to reduce carbon emissions in order to take control of the climate change. Widespread use of information and communication technologies will reduce the amount of carbon emissions.

The widespread usage of information and communication technology solutions in all segments of society over the past 25 years has reduced energy consumption while at the same time increasing productivity. Implementation of information and communication technology solutions provides a true transformation of resource-efficient and service-based aggregation, along with significant reductions in carbon emissions, particularly in the construction, transportation and manufacturing sectors. From a macro perspective, market and policy-based approaches are being implemented to reduce greenhouse gas emissions, and markets are turning to new technologies, demanding new, innovative applications. As a result, new markets and industries have been encouraged for research and development to develop new technologies that are significant economic engine for countries throughout the 21st century [16].

Rapid economic growth is the main determinant of increased carbon emissions. The development of the countries such as population growth, rapid urbanization, industrialization and tourism are creating considerable pressure on natural resources and the environment. The increase in economic growth leads to an increase in the level of carbon emissions [17]. Information and communication technologies have a vital role to achieve sustainable economic growth and carbon emissions reduction targets. If the new technology is important for the mitigating then research and development expenditures will be the one of the main key for the new technologies.

In this context, especially in the light of the global economy, information and communication technologies are emerging as the best policy instruments to promote economic growth and reduce carbon emissions. The development of information and communication technologies is on a global scale, and each country invests in these technologies to ensure economic growth. As a result, technological developments change old, energy intensive structures with fresh, carbon neutral structures. The widespread use of information and communication technologies reduces distances, increases productivity and provides energy, thus this will contribute to the reduction of carbon emissions [24-21].

In recent years, studies empirically examining the relationship between environmental problems and the economy have increased rapidly. Most of the studies deal with the amount of carbon emissions as pollution indicators. There is a need for intensive energy use in order for countries to achieve high sustainable economic growth. Energy consumption, especially from fossil fuels, increases carbon dioxide emissions. This study deals with the impact of information and communication technologies on carbon emissions in general in order to create a more comprehensive framework. If the climate change is a global problem, as every country is now causing an increase in the amount of carbon emissions, every country must change their policies to mitigate climate change [5-17-20].

This study is analyzing the impact of usage of information and communication technologies and research and development for reducing the use of fossil fuels as they provide more opportunities to prevent energy spending through telephones, mobile applications, websites and new technologies. By using new technologies and information and

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communication technologies for low carbon emissions will reduce climate change and are a general economic development strategy that aligns with targets to increase energy security while at the same time providing gradual elimination of unproductive businesses and job creation in sectors where services and high technology are involved [32].

The study has five sections. In the next section theoretical background and literature will be presented. Then, in the third section the model, method and data will be introduced. In the fourth section, empirical results will be discussed and in the conclusion section, the results of empirical findings will be evaluated and the policy implications will be offered.

Theoretical Background and Literature ReviewEconomic activity is the main determinant of carbon emissions. Economic growth is often

associated with high carbon emission per unit output in specialized industries. Historically, there is a close relationship between economic growth and carbon emissions. Many of the studies in the literature emphasize that economies grow in parallel with environmental problems. On the other hand, analyzing the mitigation of the climate change for sustainable development became main aim for the studies. The studies in the literature are mainly divided into three paths. First path is the studies that analyze the impact of economic growth on carbon emission, and the second path is the studies analyzing the effect of foreign trade on carbon emission. Third path is the new one and analyze the impact of new technologies (includes all research and development, information and communication technologies) on carbon emission [1-9-11].

Despite the large number of studies for the first two path in the literature, studies that demonstrate the effect of new technologies on reducing carbon emissions are limited. This study is a contribution to the third path of the literature by using main indicators for the new technologies and information and communication technologies. The rationale behind this study is quite different from the literature. The effect of the two new indicators to carbon emission is analyzed with the energy usage as the main determinant of the carbon emission. These two indicators are the research and development expenditure and a proxy for information and communication technology. Energy usage is the main determinant of the carbon emission and a positive impact is expected. Second indicator is the research and development expenditure used as a proxy for the new technologies and a negative impact is expected. Third indicator is the proxy for information and communication technology and a negative impact is expected. The relevant literature summary for carbon emissions is given below [12-14].

Selden and Song (1994) analyzed the effect of economic growth on carbon emissions on panel data analysis. They found that carbon emissions exhibit inverted-U relationships with per capita GDP. They suggested that carbon emissions will decrease in the very long run with a continuing growth in global emissions over the next several decades [28].

Antweiler et. al. (2001) analyzed the effect of foreign trade openness on carbon emissions. As a result of the study, countries' economic growth rates increased while carbon emissions rose in parallel. It was found that carbon trade increased while foreign trade margin increased [4].

Mielnik and Goldemberg (2002) analyzed twenty of developing countries, and they found a decline in the energy intensity as foreign direct investment increases. The use of new technologies rises by foreign direct investment over the old fashioned traditional technologies [23].

Perman and Stern (2003) tested the EKC hypothesis using a panel dataset of sulfur emissions and GDP data for 74 countries over a span of 31 years. They found that EKC has a long run equilibrium relationship and sulfur emissions are a concave function of income.

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Within empirical results they thought that EKC is a problematic concept in the case of sulfur emissions [25-30].

Say and Yücel (2006) analyzed the relationship between energy consumption and carbon emissions. The analysis was tested for Turkey between 1970-2002. As a result of the analysis, energy consumption has reached the result of increasing carbon emissions [27].

In his study Halicioğlu (2009) tested the relationship between energy usage, income and foreign trade. Time series method was used for 1960-2005 years in Turkey. As a result of the analysis, income has been found to have an impact on carbon emissions and long-term carbon emissions, energy consumption, foreign trade and income are important [15].

Bella et al (2010) studied the relationship between economic growth and carbon emissions. They used 1971-2006 period for 77 countries and estimate the model with panel data method. The results support the hypothesis of the environmental kinship curve for all countries included in the study [8].

Jaunky (2011) analyzed the relationship between economic growth and carbon emissions through the panel cointegration method. The study covered the years 1980 to 2005 for 36 countries. As a result of the analysis, it is emphasized that economic growth has increased by 1% and carbon emissions have increased by 0.68% [18].

Zhang (2011) studied the relationship between carbon emissions and financial liberalization. The study was tested for China using the Granger causality method. The result is that financial liberalization increases carbon emissions [33].

Çınar (2011) analyzed the relationship between economic growth and carbon emissions for the OECD countries between 1971-2007. Panel cointegration method was used in the study. As a result of the analysis, it was determined that there is a cointegration relation between economic growth and carbon emissions and that rapid economic growth increases environmental pollution [10].

Ruth (2011) studied information and communication technologies, carbon emissions and energy consumption for developed countries. As a result of the analysis, the information and communication technology sector has been found to have a major impact on carbon emissions and energy consumption. It has been found that using these technologies reduces energy consumption by about 3-5% [26].

Adom et al. (2012) studied of the relationship between carbon dioxide emissions and economic growth for the African continent. As a result of econometric analyzes, econometric growth for Ghana and Morocco has increased carbon emissions, but no similar situation has been observed in Senegal [2].

Ahmed and Long (2012) analyzed the relationship between carbon emissions, energy consumption, trade liberalization, population density and economic growth. The study was tested for the period 1971-2008 for Pakistan with the ARDL boundary test approach. A short-term and long-term relationship between carbon emissions and growth has been identified. These results support the hypothesis of environmental kinship for Pakistan [3].

Simpson (2013) studied the impact of information and communication technology use on carbon emissions for the period 1990-2009. As a result of the analysis, information and communication technologies have been found to be effective on carbon emissions in two directions. As a result, it has been determined that information and communication technology tools contribute to the increase of greenhouse gas due to energy-consuming and heat-emitting vehicles, while the widespread use of these technologies reduces carbon emissions due to the use of intelligent devices [29].

Yildirim (2013) analyzed the effect of foreign trade openness and income on carbon emissions. In the analysis, the 20 strongest economies in the world were tested for 1990-2009. As a result of the model analyzed with the least squares model, it is reached that countries' foreign trade openness increases carbon emissions and supports environmental hypothesis curve hypothesis for all countries[31].

Lee and Brahmasrene (2014) used panel cointegration analysis to examine the short and long term relationship between information and communication technologies, carbon emissions and economic growth. In the analysis, 1991-2009 period was considered for 9 countries which are members of Southeast Asian nations. As a result of the econometric analysis, long term equilibrium relation was found between three variables. Information and

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communication technologies have an important influence on economic growth and carbon emissions [21].

In Aytun and Akın (2015) study, the relationship between carbon emissions, energy consumption and education level variables were tested for Turkey using the causality method. In practice, the relationship between primary, secondary and tertiary levels and carbon emissions for the period 1971-2010 has been studied separately. As a result of the application, it is found that there is no causality relation between primary and secondary schooling levels and carbon dioxide emissions and energy consumption, whereas higher education is a causality relation to carbon dioxide emission and energy consumption from schooling level [7].

Methodology and Data SetIn this study, the effect of information and communication technology index and research

and development expenditure on carbon emissions was tested using the System Generalized Moments Method, a dynamic panel data analysis technique [6]. Data covering the years 2003-2014 of the 29 selected OECD member countries were used in the study. The reason for handling the period of 2003-2014 as the observation interval is that the data pertaining to the variables are not regular for each country and year. These countries are as follows; Germany, Austria, Belgium, Canada, Czech Republic, Denmark, Estonia, France, Finland, Finland, Germany, Italy, Netherlands, Norway, Spain, Sweden, Sweden, United Kingdom, United States, United States, Canada, Luxembourg, Norway, Portugal, Sweden, Switzerland, Slovakia, Turkey and Greece. The model to explain the effect of information and communication technologies on carbon emissions is as follows:

CO2¿=∝i+ β1(CO 2i ,t−1)+ β2( ICTI i ,t)+β3(EU i ,t)+β4(RDS i , t)+u i ,t (1)

In the equation, i is the index country, t is the time index. The variables used in the logarithmic form in the analysis can be listed as follows:

CO2: Carbon emissions are mostly caused by the burning of fossil fuels and the production of cement. These include the production of carbon dioxide produced during the consumption of solid, liquid and gaseous fuels. Annual carbon dioxide emission per capita is used as carbon emission and values are in metric tons.

ICTI: An index is used as proxy for information and communication technology. The expected direction of the link between information and communication technology products and carbon is negative. The reason for this is the widespread use of information and communication technologies increase productivity and reduce global carbon emissions. The information and communication technology index is calculated as follows.

BI i ,t=0,2 (number of landline per 100 people )+0,2 (number of mobile lines per 100 people )+0,2 (number of broadbandinternet subscribers¿landline )+0,2 (number of land line internet subscriber )+0,2(internet user per 100 people)

(2)

EU: Per capita energy use is the main reason of the carbon emissions and values are taken as equivalent to kg of oil. The expected direction of the link between per capita carbon emissions and per capita energy consumption is likely to be positive, as the increase in energy consumption will increase carbon emissions.

RDS: It is the expenditure of research and development of countries. Values are in current prices and in US dollars. Based on the literature, it is thought that increasing research and development expenditures will reduce emission effects and carbon emissions. For this reason, a negative relation is expected in the coefficient.

Data obtained from the International Telecommunication Union (ITU) and the Organization for Economic Co-operation and Development (OECD) and the World Bank (WB) were used in the analyze. The series are listed in table 1.

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Table 1.VariablesVariable Databaseper capita CO2 emission (metric tons)

WDI

Number of land line (per 100 people)

ITU

Number of mobile lines (per 100 people)

ITU

Number of broadband internet subscribers from land line (per 100 people)

ITU

Number of land line internet subscriber (per 100 people)

ITU

Internet user (per 100 people) ITUPer capita energy usage (equal to kg of oil)

WDI

Research and development expenditure

OECD

All the variables in the model are in logarithmic form. The two-step the generalized method of moment estimator is employed for estimating impact of information and communication technology and research and development expenditures on carbon emissions. The reason for using this type of estimator is to eliminate the serial correlation, heteroscedasticity, and endogeneity of the variables. On the other hand, we employed sargan test to examine the overall validity of the instruments and run the specification test to examine the second-order serial correlation of the residuals. In addition, for confirming the appropriate model specification, the first-order serial correlation should be confirmed while the second-order serial correlation should be rejected [6-16].Empirical Results

The two-stage system-GMM analysis estimation results for the model as stated in equation 1are given in Table 2.

Table 2. GMM Estimation Results of the Model (* represent statistical significance at the 1%)Variables Coefficients

CO2 0.6186861( 0.000)*

ICTI -0.189123(0.000)*

EU 0.3654374(0.000)*

RDS -0.023052(0.000)*

Wald Test χ2(4) = 147652.26[0.0000]*

Sargan Test χ2(64) = 28.56564[1.0000]

Specification testsAR(1) -3.4494

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[0.0006]

AR(2) -.49528[0.6204]

According to the estimation results of the two-step GMM method, the impact of information and communication technologies and research and development expenditures on carbon emissions is found to be negative and statistically significant while energy usage is effecting the carbon emission positively as expected like in the literature. It is also seen from the table that the effect of the information and communication technology indicator (ICTI), the research and development expenditure, and per capita energy consumption (EU) on carbon emissions is found as in the literature.

It is noted that the coefficient of information and communication technologies in the application is negative and statistically significant at 1% level. These findings revealed that a 1% increase in the increase of ICTs by countries, which would result in a 0.18% reduction in carbon emissions. Because information and communication technologies are green energy-based, the widespread use of these technologies leads to significant savings in energy consumption and reduces carbon emissions.

Research and development expenditures by governments are also negative and statistically significant. Meanwhile, a 1% increase in Research and development expenditures decreases the CO2 emission by 0.02%.

The energy consumption coefficient is positive and statistically significant. Accordingly, a 1% increase in energy consumption has resulted in a 0.36 increase in carbon emissions. The unconscious and intense use of energy resources, one of the basic needs that enable human beings to live their lives in a healthy and safe way, causes the environment to deteriorate. For the countries considered, energy consumption has an effect of increasing carbon emissions.

ConclusionToday, information and communication technologies can address environmental issues

with equal importance to economic growth. Information and communication technologies are becoming increasingly important for green and sustainable goals, as governments and local governments are increasingly focused on clean environments. In this regard, information and communication technologies facilitate the use of intelligent applications and cause new services to be created that benefit society and government.

In this study, the effects of information and communication technologies on carbon emissions were aimed and evaluated by dynamic panel data analysis method for selected OECD countries. Unlike current studies on this subject, this study has been tested on carbon emissions, information and communication technologies, energy consumption and research and development expenditures as a whole.

Findings show that the use of information and communication technologies and research and development expenditures has a positive effect on reducing carbon emissions. We obtained three results from the model. First, there is an inverse relationship between the carbon emission and the usage of information and communication technologies. That is, the widespread use of information and communication technology reduces the amount of carbon emissions. Second, the research and development expenditures have an inverse relationship with carbon emission. Third, energy usage, as expected, increases the carbon emission.

Therefore, information and communication technologies play a pivotal role in the development of environmental sustainability. For this reason, governments should design strategies depend on new technologies that will enable economies to go through sustainable stages of their current growth. For this reason, the critical targets in environmental and growth policies must support the stimulating innovation that brings together the environment and the economy.

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AcknowledgementsThis study was supported by Research Fund of the Cukurova University. We are thankful

to Cukurova University for supporting this project. Project code is SED-2017-8630.

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ASSESSMENT OF THE RELATIONSHIP BETWEEN THE PATENT APPLICATIONS BY RESEARCHERS, INSTITUTIONS AND

INVESTMENT IN EDUCATİON: CASE OF TURKEYMüjgan DENİZ 1 , Kutluk Kağan SÜMER2

1 İstanbul Üniversitesi, İktisat Fakültesi, email: [email protected] 2 İstanbul Üniversitesi İktisat Fakültesi, Ekonometri Bölümü e-mail: [email protected]

1Bu çalışma İstanbul Üniversitesi BAP Birimi tarafından desteklenmiştir.

AbstractThis paper quantifies the patent applications regarding the effect of increasing academic investments and education expenditures in Turkey. For the last fifteen years, number of universities, research institutions (both state and private) and university graduates has increased sharply. It is important to look for the pecuniary and non-pecuniary returns of education to individuals and society. As a growing trend in the world, innovation-based growth has occupied the most efficient part of the whole economic growth. For this reason, innovation that depends on science and technology has become more studied subject in economic growth models and economics of education. As a result of rising investments and support for scientific research and educational facilities; many new bright ideas and patent applications by Turkish university students or researchers has appeared. To sum-up, this study has considered the number of patent grants and applications for an invention or development of a scientific product by university departments or a research institution.. etc. Finally, the relationship between investment in education system as well as R&D and the number of patent grants throughout the last decade in Turkey has been further analysed.Key Words: Education; Research and Development; Innovation; Growth; Technology

1.Introduction Boost in patent applications and patent-driven innovations contribute to the growth with

capital, labor and multi-factor productivity. Multi-factor productivity growth is an important indicator of economic growth. In practice, the effect of innovation on total factor productivity is used a measure of Research and Development (R & D) intensity. Expenditure on education and support for R&D facilities can be considered as an investment in knowledge and technological development. Thus, higher R&D expenditure would support the higher growth rates. In the empirical studies supports a positive and strong relationship between R & D investments and productivity growth. Considering the long years people devote to education, it should be asked: ‘’what is education for?’’ and ‘’how much contribution does it make for patent applications and innovation facilities?’’ Human capital is one of the major factors that can be improved by getting investment on education continuously. In order to increase number of universities, institutions and scientific activities etc. given the rising educational expenditures, the importance of education and its positive results have been recognized obviously.

As a growing trend in the world, innovation-based growth has occupied the most efficient part of the whole growth. Investment on innovation that depends on science and technology has become more crucial subject in economic growth models. The aim of this research is to examine the relationship between education level, innovation-based growth and investments on R&D facilities for Turkish economy for the last two decades Technology have become a curicial variable in economic development and growth process for any country; that is to say it is increasingly rising trend among developing countries. Namely, they allocate huge budgets for research and development as well as investment for academics and universities. Also, technological improvements leads to an increase in rates of per capita national income and Gross Domestic Products of those countires.

1 Bu çalışma İstanbul Üniversitesi BAP Birimi tarafından desteklenmiştir.

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Regarding the rising expenditures for education and R&D facilities all over Turkey during the last ten years, number of patent applications for innovative and technological products as a result of this process have increased much more. Academics, students and young researchers have begun to paid more attention to innovation and technology. With increasing potentials of public and private universities and their Research Centers and High-tech institutions, these developments have afford young creative brains an opportuniy to produce something innovative and technological. When compared to the number of patent in Japan, China, South Korea, and Turkey; one can easily recognized that Turkey shows how back in terms of number of patents from the others. It can also be said that when compared to the numbers of patents in South Korea and China with numbers in Japan with the initial of R & D activities and achievements in this field, number of patent grants is directly proportional to the results of R & D activities in these countries.

Japan earlier than South Korea and South Korea earlier than China has started the activities of research and development. In this context, according to World Intellectual Property Organization (WIPO) in ranking of patent grants, Japan is the first place, South Korea is the second and China takes the third place. To sum-up, Patent Office approval as competent, in the form of Japan, South Korea and China; countries starting research activities earlier forge ahead with the experience of R&D activities and lead the race for patent grants.

What can be done immediately as asserted in this article is to make more investment in educational system and allocate more resources to R &D activities, young researchers and research institutions. Major aim of this paper is to examine the long-run relationship between research & development, innovation and economic growth in Turkey.

1.1. Technology, Development and Growth RelationshipTechnological innovation across the world is one of the driving forces behind productivity

advance. Technological changes have two sides: on the one side, the technology is an object of change and on the other side, it is subject to change. Technological advances can produce important influences towards production processes and organization methods in economics, while providing with important effects in social life. In this context, sustainable economic, social and political transformation, while the socio-cultural effects bringing together technological developments, have made somekind a revolutionary effect for human history, for example; fire, the wheel and printing machine.. etc. Industrial revolution which is the starting point of the contemporary world after the steam power and electric energy has entered into third stage with Information and Communication Technologies. In the process of socio-economic development, agricultural revolution is the first wave, the second wave is the industrial revolution and the information revolution is accepted as the third wave. (Taban & Kar, 2008).

After the industrial revolution, the scale of technology which has become one of the most important criteria for development has been also an important factor on which emphasized by many economic thought flows strongly. Although Classical, Marxist, Neo-classical economists do not attribute a big importance for technological development, they accept that technological development plays a key role in achiving economic growth. (Tiryakioğlu, 2011).

Information society is emerged as a result of communicative and informative revolution. Different social structure and changes from industrial society gave way to some important problems, especially within developing countries. For example, Turkey is not a country which has passed through successfully all the stages of industrialization. There are no sufficient national production and technology to create a welfare society similar to those in western countries. Therefore, she is sorrowing from both the lack of industrialization and also from pre-conditions of information society. What can be done immediately, as asserted in this

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article, is to make more investment in economical area and allocate more resources to the Turkish educational system.

Especially after the second world war, the emergence of rapid technological advancement in a wide range of fields has caused technological backwardness to become an element among the fundamental causes of underdevelopment. Applied technology in agriculture and industry in countries, along with the general technical level of information has been curicial factor for the last century. The issue from this perspective is that technological developments in the process of economic development of less developed countries is really vital.

In recent years, the share of the rapid technological developments in technology sector has led to increased significantly within the world economy. Technology-intensive and high activity with other sectors in the economy, the advanced technology sector completely different economic development has an important function in economic development. (Müslümov & Aras, 2002). Developing countries to need technology to increase the speed of their economic growth and development. However, it is very important to know that developing countries like Turkey would not achieve sustainable economic growth just through transferred technology. Obviously she needs to develop her own technology and to be an innovative country in the field of technology and science not a follower.

Under-developed or developing countries in general don't innovate new technology, they mostly need and try to transfer the advanced countries in this field of technology. In other words, less-developed countries, far behind to create new technologies and they are deprived of the current structural technological levels until they have to import technology. This technology transfering process has a price for importing countries and this is a way to get technology for developing countries, it can be realized as a contribution of underdeveloped countries to the technological research and development costs of developed countries. (Kutlu, n.d.).

Some major types of technology transfering process are: ‘’license and know-how agreements and production partnership, product and fixed capital goods exports, exchange of Scientific and technical personnel, training and learning, commercial visits, open literature, international aid and government support programs.’’(Kiper, 2004) On the other hand, substantial investments on R & D activities and support for university students projects, university techno-parks and University industry collaborations, shortly investing on human capital within the borders of a country is much more effective than all of the above-mentioned types.

1.2. Theory and Literature ReviewMany empirical studies have been made in this subject. Some of the studies support a

positive and strong relationship between R & D investments and productivity and economic growth. Some of them could not find a significant relationship between R&D and patent grants and economic growth. Genç and Atasoy (2010) analysed the relationship between R&D expenditures and economic growth by using the data for the period between 1997-2008 and causality method, and found that there is an unilateral causality relationship from R&D expenditures to economic growth.

Ülkü (2004) in her paper: ‘’R&D, Innovation, and Economic Growth: An Empirical Analysis’’ IMF Working Paper, No: WP/04/185, investigates the main postulations of the R&D based growth models that innovation is created in the R&D sectors and it enables sustainable economic growth, provided that there are constant returns to innovation in terms of R&D. The analysis employs various panel data techniques and uses patent and R&D data for 20 OECD and 10 Non-OECD countries for the period 1981–97. The results suggest a positive relationship between per capita GDP and innovation in both OECD and non-OECD countries, while the effect of R&D stock on innovation is significant only in the OECD

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countries with large markets. However, there is no evidence for constant returns to innovation in terms of R&D, implying that innovation does not lead to permanent increases in economic growth.

Korkmaz, (2010) ‘’The Analyses of the Relationship Between R&D Investments in Turkey and Economic Development with VAR Model, Journal of Yasar University, 20(5), 3320-3330, analysed the relationship between R&D investments and economic growth with cointegration method by using the data for the period between 1990-2008 and came to the conclusion that ‘’there is a cointegration between both variants and both variants affect each other in the long term.’’ Taban and Sengür (2014) analysed the relationship between R&D and economic growth by using the data for the period between 1990-2012 in Turkey and cointegration models, and reached to the conclusion that R&D expenditures affect economic growth positively in the long term.

Similarly, Gülmez and Yardımcıoglu (2012) analysed the relationship between R&D expenditures and economic growth in OECD countries by using the data for the period between 1990-2010 and came to the conclusion that there is a significant interactive relationship between R&D expenditures and economic growth variants in the long term. Akıncı and Sevinç (2013), examined the period 1990-2011 for the relationship between R&D and Economic Development in Turkey with a Granger Casuality test. As a result of this analysis, unilateral causality was found between private R&D expenditures, R&D expenditures made by higher education and economic development.

According to the paper written by Mercan, Göktaş & Gömleksiz titled as ‘’Effects Of R&D Activities And Entrepreneurs On Innovation: Evidence From Patent Data’’; the effects of R & D spending of universities on rising patents in general is stronger compared to other sectoral variables. Conversely, effect of the increasing number of researchers on patent applications have been quite small. It is also important that R & D expenditure made by the private sector and higher educations resulted in positive effect on the number of patents, whereas it has found a negative relationship between the number of patents with its R & D spending of public sector. The reason for this may be due to the failure to obtain patent the public domain as a result of the innovations made public good characteristics as a result of R & D spending. Within the framework of the findings obtained in this study, regarding the coefficient between R&D activities and number of researchers, it was seen that the relationship between innovation and research activities is strong.

Technology have become a curicial variable in economic development and growth process for any country; that is to say it is increasingly rising trend among developing countries. Namely, they allocate huge budgets for research and development processes as well as investment for academics and universities. Also, technological improvements leads to an increase in rates of per capita national income and Gross Domestic Products of those countires.

Regarding the rising expenditures for education and R&D facilities all over Turkey during the last ten years, number of patent applications for innovative and technological products as a result of this process have increased much more. With increasing potentials of public and private universities and their Research Centers and High-tech institutions, these developments have afford young creative brains an opportuniy to produce something innovative and technological.

2. Methodology and Data First of all, this study aims to examine the casuality between the ratio of R&D expenditures

to GDP and labor force in R&D activities and GDP growth for Turkey. Research budget allocated from GDP to research activities which is recently be upward tendency should lead to innovation boost growth. However, it should be analyzed if there is a significant correlation

26


between R&D investments and number of researchers and economic growth in Turkey recently. This relationship should be considered analytically. In determining technology/innovation competence of countries, some indicators are used. These are the rate of Research and Development expenditures to GDP of a country, the number of working scientists and engineers in R & D services, and finally number of scientific publications and patent applications. When developing countries compared in terms of technology indicators it is seen that there is a huge difference between these two groups. Levels of development of countries means that less-developed countries should upgrade the level of the above indicators for catching pioneer countries. The number of beneficiaries of computer, internet and communication tools in comparing the ratio of high-tech product export out of total export topics. (Taban & Kar, 2008)

Growth rates (%/GDP) as a result of R&D activities is accepted as dependent variable for this study on the other hand; investment (expenditures) on R&D activities, number of researchers are independent variables of this study. Pairwise Granger Causality Tests were used to analyse and interpret the data. The parameters of subject variables were calculated by VAR method and findings of model were interpreted at the level of the variables and supported by suggestions. In this study, per capita R & D expenditures, investments for young scientists and researchers via universities, high-tech institutions and number of patent applications/grants are taken into consideration for econometric analysis.

2.1. Procedures of Data Collection The objectives of the study are: To find out the correlation, if there is, between rising

expenditures and investment in university education, R&D activities and patent grants or tendency for innovation among young researchers; to find out the preference of university students’ towards searching and developing new technology after getting support from their university or research institutes;to find out the effects of policies by governments including substantial investment in education system and research activities among university students.

To collect the requisite data related to various aspects of R&D expenditures and education investments, official statistics and figures were used and related data has been taken from TUIK (Turkish Statistical Institute). Based on these figures, it is possible to make a comparison of research spending and investment rates by public sector, higher education institutes and private sector. Share of Gross Domestic Expenditure on Research and Development (GERD) in GDP was 0.95%

According to the Research and Development Activities Survey 2013; results in public sector, foundation universities and business enterprise sector and calculations based on higher education sector registers for state universities, Gross Domestic Expenditure on Research and Development (GERD) increased in Turkey in 2013 compared to the previous year by 13.4% and reached to 14 billion 807 million TL. In Turkey, share of GERD in GDP was 0.95% in 2013. It was 0.92% in 2012.

Figure 1. Gross Domestic Expenditure on R&D (GERD) as a percentage of GDP

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Source: Turkish Statistical Institute, Survey 2013.

In this context, the ratio of research expenditures was also observed after 2013. Correspondingly in 2014 and 2015, the share of GERD in GDP has been steadily increased. Namely, the GERD ratio was 1.01 in 2014 and 1.06 in 2015 as a percentage of GDP.

Table 1. Distribution of Patent Applications in Turkey by the Years

Domestic Foreigners

Year TPE PCT EPC Total Rate of Increase TPE PCT EPCRate of

Increase

Cumulative Total

Increasing Rate

1995 170 0 0 170 - 1520 0 0 1520 - 1690 -

1996 189 0 0 189 11,18% 687 26 0 713 -53,09% 902 -46,63%

1997 202 1 0 203 7,41% 598 730 0 1328 86,26% 1531 69,73%

1998 201 6 0 207 1,97% 596 1680 0 2276 71,39% 2483 62,18%

1999 265 11 0 276 33,33% 524 2220 0 2744 20,56% 3020 21,63%

2000 258 19 0 277 0,36% 442 2714 0 3156 15,01% 3433 13,68%

2001 298 39 0 337 21,66% 119 2756 2 2877 -8,84% 3214 -6,38%

2002 387 27 0 414 22,85% 88 1335 37 1460 -49,25% 1874 -41,69%2003 454 35 1 490 18,36% 43 305 314 662 -54,66% 1152 -38,53%

2004 633 49 3 685 39,80% 68 167 1342 1577 138,22% 2262 96,35%

2005 895 33 7 935 36,50% 75 143 2308 2526 60,18% 3461 53,01%

2006 979 93 18 1090 16,58% 71 89 3915 4075 61,32% 5165 49,23%

2007 1747 60 31 1838 68,62% 71 139 4141 4351 6,77% 6189 19,83%

2008 2159 69 40 2268 23,39% 68 107 4694 4869 11,91% 7137 15,32%

2009 2473 74 41 2588 14,11% 69 105 4479 4653 -4,44% 7241 1,46%

2010 3120 60 70 3250 25,58% 77 100 4916 5093 9,46% 8343 15,22%

2011 3962 43 82 4087 25,75% 120 100 5934 6154 20,83% 10241 22,75%

2012 4360 74 109 4543 11,16% 78 154 6824 7056 14,66% 11599 13,26%

2013 4345 54 129 4528 -0,33% 95 175 7257 7527 6,68% 12055 3,93%

2014 4654 112 95 4861 7,35% 149 183 7182 7514 -0,17% 12375 2,65%

2015 5302 50 160 5512 13,39% 251 238 7957 8446 12,40% 13958 12,79%

2016 6153 88 204 6445 16,93% 407 211 9715 10333 22,34% 16778 20,20%Source: It was prepared by the report date on 17th of January in 2107.

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2.2. Statistical Techniques UsedPairwise Granger Causality Tests were used to analyse and interpret the data.

Pairwise Granger Causality Tests results are as the following.

Date: 04/24/17 Time: 20:40Sample: 1 27Lags: 1

Null Hypothesis: Obs F-Statistic Prob.

GRW does not Granger Cause EXPO 26 2.20055 0.1515 EXPO does not Granger Cause GRW 0.00769 0.9309

PAT does not Granger Cause EXPO 26 1.02311 0.3223 EXPO does not Granger Cause PAT 2.59839 0.1206

RD_LF does not Granger Cause EXPO 26 0.36536 0.5515 EXPO does not Granger Cause RD_LF 2.80950 0.1073

RD_GDP does not Granger Cause 26 0.47488 0.4976 EXPO does not Granger Cause RD_GDP 8.50322 0.0078

PAT does not Granger Cause GRW 26 0.83593 0.3701

GRW does not Granger Cause PAT 0.90878 0.3503

RD_LF does not Granger Cause GRW 26 0.01384 0.9074

GRW does not Granger Cause RD_LF 0.00776 0.9306

RD_GDP does not Granger Cause GRW 26 0.01515 0.9031

GRW does not Granger Cause RD_GDP 2.48398 0.1287

RD_LF does not Granger Cause PAT 26 5.33705 0.0302 PAT does not Granger Cause RD_LF 1.52164 0.2298

RD_GDP does not Granger Cause PAT 26 7.94713 0.0097 PAT does not Granger Cause RD_GDP 0.11110 0.7419

RD_GDP does not Granger Cause RD_LF 26 0.24342 0.6264

RD_LF does not Granger Cause RD_GDP 14.0603 0.0010

At this level of the sudy, RD/GDP patent numbers is the granger cause of RD_LF patent number, and export RD/GDP is the cause of RD_LF RD/GDP. Considering the stability levels at this model, two methods were used. One is Augmented Dickey Fuller and the other is Philips Peron.

ADF PP ADF PP ADF PPGRW 0.0009 0.0001EXP 0.9949 0.9893 0.0017 0.0015PAT 0.8994 0.9706 0.0611 0.0879 0.0017 0.0000RD_LF 1.0000 1.0000 0.0789 0.0789 0.0000 0.0000RD_GDP 0.9922 0.8907 0.0000 0.0000

LEVE

L

1 st

Diff

eren

ce

2 nd

Diff

eren

ce

Unit Root Test Probability

Stability Levels is as the following;

GRW LEVELEXP 1st DifferencePAT 2nd DifferenceRD_LF 2nd DifferenceRD_GDP 1st Difference

Regarding stabilities, if we look at casualities;Pairwise Granger Causality Tests

29


Sample: 1 27

Lags: 1

Null Hypothesis: Obs F-Statistic Prob.

GRW does not Granger Cause D(EXPO) 25 2.45297 0.1316

D(EXPO) does not Granger Cause GRW 0.20270 0.6570

D(D(PAT)) does not Granger Cause D(EXPO) 24 0.02624 0.8729

D(EXPO) does not Granger Cause D(D(PAT)) 0.16578 0.6880

D(RD_GDP) does not Granger Cause D(EXPO) 25 0.00186 0.9660

D(EXPO) does not Granger Cause D(RD_GDP) 3.61129 0.0706

D(D(RD_LF)) does not Granger Cause D(EXPO) 24 4.13337 0.0549

D(EXPO) does not Granger Cause D(D(RD_LF)) 0.48467 0.4939

D(D(PAT)) does not Granger Cause GRW 24 0.03529 0.8528

GRW does not Granger Cause D(D(PAT)) 1.45436 0.2412

D(RD_GDP) does not Granger Cause GRW 25 1.70773 0.2048

GRW does not Granger Cause D(RD_GDP) 0.75062 0.3956

D(D(RD_LF)) does not Granger Cause GRW 24 0.82730 0.3734

GRW does not Granger Cause D(D(RD_LF)) 0.21480 0.6478

D(RD_GDP) does not Granger Cause D(D(PAT)) 24 0.02121 0.8856

D(D(PAT)) does not Granger Cause D(RD_GDP) 0.62933 0.4365

D(D(RD_LF)) does not Granger Cause D(D(PAT)) 24 0.02746 0.8700

D(D(PAT)) does not Granger Cause D(D(RD_LF)) 0.09866 0.7565

D(D(RD_LF)) does not Granger Cause D(RD_GDP) 24 5.31906 0.0314 D(RD_GDP) does not Granger Cause D(D(RD_LF)) 0.17815 0.6773

Only RD_LF RD/GDP is the granger casuality. If we set a Model;

GRW = 0 + 1 D(D(PAT)) + 2 D(RD_GDP) + 3 D(D(RD_LF))D(EXPO) = 0 + 1 D(D(PAT)) + 2 D(RD_GDP) + 3 D(D(RD_LF))

Dependent Variable: GRWMethod: Least SquaresSample (adjusted): 3 27Included observations: 25 after adjustments

Variable Coefficient Std. Error t-Statistic Prob.

C 4.486592 0.871088 5.150561 0.0000D(D(PAT)) 0.002097 0.001473 1.423677 0.1692

D(RD_GDP) -21.39804 12.93032 -1.654874 0.1128D(D(RD_LF)) 0.000326 0.000162 2.008011 0.0577

R-squared 0.277609 Mean dependent var 4.144000Adjusted R-squared 0.174410 S.D. dependent var 4.561253

S.E. of regression 4.144445 Akaike info criterion 5.827061Sum squared resid 360.7048 Schwarz criterion 6.022081

Log likelihood -68.83827 Hannan-Quinn criter. 5.881152F-statistic 2.690044 Durbin-Watson stat 2.073104

Prob(F-statistic) 0.072409

Dependent Variable: D(EXPO)

Method: Least SquaresSample (adjusted): 3 27

Included observations: 25 after adjustments

Variable Coefficient Std. Error t-Statistic Prob.

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C 4.93E+09 1.51E+09 3.269014 0.0037D(D(PAT)) 950091.0 2548729. 0.372771 0.7131

D(RD_GDP) -2.21E+10 2.24E+10 -0.985874 0.3354D(D(RD_LF)) 132326.4 280736.7 0.471354 0.6422

R-squared 0.054516 Mean dependent var 4.52E+09

Adjusted R-squared -0.080554 S.D. dependent var 6.90E+09S.E. of regression 7.17E+09 Akaike info criterion 48.36989

Sum squared resid 1.08E+21 Schwarz criterion 48.56491Log likelihood -600.6236 Hannan-Quinn criter. 48.42398

F-statistic 0.403613 Durbin-Watson stat 1.704896Prob(F-statistic) 0.751908

As a result, It is seen that both models are insignificant. In order to make VAR analysis, when we look at length of lagging, it has seen that lagging is ideal level.

Endogenous variables: D(EXPO) GRW D(D(PAT)) D(RD_GDP) D(D(RD_LF))Exogenous variables: C D(EXPO) GRW D(D(PAT)) D(RD_GDP) D(D(RD_LF))

Sample: 1 27Included observations: 23

Lag LogL LR FPE AIC SC HQ

0 3164.592 NA* 3.1e-125* -272.5732* -271.0921* -272.2007*

1 3117.228 -49.42259 2.4e-122 -266.2807 -263.5654 -265.59782 3049.414 -41.27836 2.6e-118 -258.2099 -254.2603 -257.2166

* indicates lag order selected by the criterion

LR: sequential modified LR test statistic (each test at 5% level) FPE: Final prediction error

AIC: Akaike information criterion SC: Schwarz information criterion

HQ: Hannan-Quinn information criterionModel belonging to VAR analysis is the following; Vector Autoregression Estimates Sample (adjusted): 5 27 Included observations: 23 after adjustments Standard errors in ( ) & t-statistics in [ ]

D(EXPO) GRW D(D(PAT)) D(RD_GDP) D(D(RD_LF))

D(EXPO(-1)) 1.88E-16 0.000000 -2.98E-23 1.37E-27 2.13E-22 (1.1E-15) (3.5E-25) (2.2E-23) (2.2E-27) (2.3E-22)

[ 0.17280] [ 0.00000] [-1.34336] [ 0.61528] [ 0.91931]

D(EXPO(-2)) 2.96E-15 8.51E-25 -3.40E-23 -1.17E-27 -3.88E-22 (1.6E-15) (5.3E-25) (3.3E-23) (3.3E-27) (3.5E-22)

[ 1.81915] [ 1.61057] [-1.02702] [-0.35331] [-1.12062]

GRW(-1) -1.43E-06 -7.41E-17 6.64E-14 -5.79E-18 -5.50E-13 (1.8E-06) (6.0E-16) (3.8E-14) (3.8E-18) (3.9E-13)

[-0.77764] [-0.12375] [ 1.77017] [-1.53829] [-1.40324]

GRW(-2) -4.67E-06 3.40E-16 1.12E-13 -6.84E-18 -7.09E-13 (2.6E-06) (8.3E-16) (5.2E-14) (5.2E-18) (5.5E-13)

[-1.81992] [ 0.40771] [ 2.14246] [-1.30327] [-1.29817]

D(D(PAT(-1))) 8.07E-09 -8.55E-19 -3.06E-16 1.87E-20 2.28E-15 (1.1E-08) (3.6E-18) (2.3E-16) (2.3E-20) (2.4E-15)

[ 0.72092] [-0.23465] [-1.34268] [ 0.81676] [ 0.95426]

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D(D(PAT(-2))) -4.68E-09 -3.35E-18 -3.43E-16 4.71E-20 5.15E-15

(1.7E-08) (5.4E-18) (3.4E-16) (3.4E-20) (3.6E-15)[-0.27994] [-0.61680] [-1.00838] [ 1.38016] [ 1.44711]

D(RD_GDP(-1)) 4.86E-05 -5.82E-14 -1.45E-12 0.000000 2.56E-11

(0.00012) (3.8E-14) (2.4E-12) (2.4E-16) (2.5E-11)[ 0.41491] [-1.52799] [-0.60716] [ 0.00000] [ 1.02899]

D(RD_GDP(-2)) -0.000225 2.69E-14 3.44E-12 -1.87E-16 -3.37E-11

(0.00013) (4.2E-14) (2.6E-12) (2.6E-16) (2.7E-11)[-1.74605] [ 0.64302] [ 1.31405] [-0.71053] [-1.22925]

D(D(RD_LF(-1))) 6.04E-09 1.20E-18 -4.73E-17 -4.62E-21 -7.07E-16

(3.1E-09) (1.0E-18) (6.2E-17) (6.3E-21) (6.5E-16)[ 1.96857] [ 1.20563] [-0.75809] [-0.73784] [-1.08308]

D(D(RD_LF(-2))) 4.76E-09 1.98E-19 -4.39E-17 -4.85E-21 -2.16E-16

(2.3E-09) (7.5E-19) (4.7E-17) (4.7E-21) (4.9E-16)[ 2.06512] [ 0.26407] [-0.93539] [-1.02858] [-0.44057]

C 2.74E-05 -6.19E-15 -4.95E-13 3.02E-17 5.94E-12

(1.7E-05) (5.4E-15) (3.4E-13) (3.4E-17) (3.6E-12)[ 1.64334] [-1.14111] [-1.45746] [ 0.88658] [ 1.67326]

D(EXPO) 1.000000 -5.08E-25 2.71E-24 3.43E-27 4.33E-22

(1.6E-15) (5.0E-25) (3.2E-23) (3.2E-27) (3.3E-22)[ 6.4e+14] [-1.00624] [ 0.08568] [ 1.08147] [ 1.31154]

GRW -2.09E-06 1.000000 4.09E-14 -4.16E-19 -4.36E-13

(1.8E-06) (5.8E-16) (3.6E-14) (3.6E-18) (3.8E-13)[-1.17173] [ 1.7e+15] [ 1.12753] [-0.11431] [-1.15065]

D(D(PAT)) 2.55E-08 -3.30E-18 1.000000 4.22E-20 6.19E-15

(1.8E-08) (5.8E-18) (3.6E-16) (3.6E-20) (3.8E-15)[ 1.43735] [-0.57135] [ 2.8e+15] [ 1.16185] [ 1.63530]

D(RD_GDP) 2.26E-05 1.20E-14 -8.13E-13 1.000000 1.75E-11

(0.00011) (3.7E-14) (2.3E-12) (2.3E-16) (2.4E-11)[ 0.19881] [ 0.32619] [-0.35143] [ 4.3e+15] [ 0.72297]

D(D(RD_LF)) 2.35E-09 5.14E-19 0.000000 -6.03E-21 1.000000

(2.0E-09) (6.5E-19) (4.1E-17) (4.1E-21) (4.2E-16)[ 1.17613] [ 0.79266] [ 0.00000] [-1.47806] [ 2.4e+15]

R-squared 1.000000 1.000000 1.000000 1.000000 1.000000 Adj. R-squared 1.000000 1.000000 1.000000 1.000000 1.000000

Sum sq. resids 3.16E-09 3.34E-28 1.31E-24 1.32E-32 1.43E-22 F-statistic 1.68E+29 6.79E+29 2.83E+30 3.35E+30 2.16E+30

Log likelihood 228.5238 581.8634 Akaike AIC -18.48033 -49.20551

Schwarz SC -17.69042 -48.41560 Mean dependent 4.66E+09 3.952609 41.69565 0.026522 -66.60870

3. ConclusionCountries, the need to provide sustainable economic developments on international basis to

prove their presence in the rapid change of technological change and also it is required to stay up-to-date on innovation process through R&D activities and crucial investments on education.

Technological innovations and improvements in the countries' competitiveness in the international arena, has an important place. Developed countries, interested in new

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technology; developing countries is transferred from developed countries to adapt their technologies to economic policies of the country's economic growth, that is to say development is the acceleration effort. However, instead of consuming transferred technology, it is necessary for developing countries to invest in R&D and higher education to improve new technologies by combining to the production process.

New technology for manufacturing basically should be targeted and R&D activities and patent grants as well should be supported by the State. In developed countries, investment in R&D has an important place in their GNP, whereas in developing countries with low R&D investments and lack of high technology, desirable growth rates could not be achieved so far. The increase of R & D spending expected to provide business growth and support the technological development and innovation process.

It is important to look at whether the R&D investments and expenditures on educational activities in Turkey has end up with a substantial economic development or growth rate. The analysis uses patent and R&D data for Turkey for the period 1995-2016, in order to determine the causal links between the variables, Granger causality test is used and the findings shows that there is no evidence that increasing R&D investments has enabled sustainable economic growth for Turkish economy for the last decades. This implies that expenditures on R&D does not lead to permanent increases in economic growth provided that there are constant returns to patent grants in terms of R&D facilities.

In this study, no significant causality found between R&D expenditures, researcher numbers and economic growth for the last fifteen years in Turkey.

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References[1] Akıncı, M. & Sevinc, H. The relationship between R&D Expenditures and Economic Growth: the Case of Turkey, 1990 – 2011, The Journal of International Social Research, Volume: 6 Issue: 27, Summer 2013, pp.7-17. [2] Archibugi, D., Mario P., Measuring Technological Change Through Patents and Innovation Surveys, Technovation, 1996:16:9.[3] Boeckholt, P. (1996), Financing innovation in the post-subsidy era – public support mechanisms to mobilize finance for innovation‟ International Journal of Technology Management, Vol 12 (7,8), pp. 760-768. [4] European Patent Office (2011b), European Patents and Patent Applications Statistics 2010, (http://www.epo.org/ about-us/office/statistics.html).[5]Genc, M.C. & Atasoy, Y. (2010) The Relationship Between R&D Expenditure and Economic Growth: Panel Data Analysis, The Journal of Knowledge Economy & Knowledge Management / Volume: V FALL, pp.27-34. [6] Gül, İ. İ. (2009). Innovation, Technoparks and Defence Industry Sector: Case of METU Technocity. Online: Http://www. Ssm. Gov. tr/anasayfa/kurumsal/SSM% 20Dergisi/2009-3/55-59. Pdf (Date: 28.02. 2011). Retrieved from http://www.ssm.gov.tr/anasayfa/kurumsal/SSM%20Dergisi/2009-3/55-59.pdf [7] Kiper, M. (2004).Technology and Technological Transfer Mechanisms, In this Context the Importance of Public Policies, TTGV.[8] Koléda, G. (2008), Promoting Innovation and Competition with Patent Policy, Journal of Evolutionary Economics, 18:433-453.[9] Korkmaz, S. (2010), Research and Development Investments in Turkey and the Relationship Examined between Economic Development with VAR model, Journal of Yasar University 2010 20(5), pp. 3320‐3330.[10] Kutlu, D. D. E., Economical Development and Growth, Anadolu University, Eskişehir. [11] Muslumov, A. & Aras, G., Development of High-Tech Sector all over the World and its Effects on Turkish Technology Sector: A Financial Approach; Information Technologies Conference, May 2002, Denizli-Pamukkale University, http://hdl.handle.net/11376/420.[12] Ndesaulwa, A. P. &Kikula, J., ‘’The Impact of Technology and Innovation (Technovation) in Developing Countries: A Review of Empirical Evidence‘’, (http://ec.europa.eu/public_opi- nion/archives/ebs/ebs_340_en.pdf).Journal of Business and Management Sciences, Vol. 4, No. 1, 2016, pp 7-11.[13] Sungur, O., Aydın, H. İ. & Eren, M. V. (2016), ‘’The relationship among R&D, Innovation, Export and Economic Growth in Turkey: Asymmetric Causality Analysis.[14] Taban, S. & Şengür, M. “R&D And Economic Growth in Turkey”, Journal of Social Science Institute Abant İzzet Baysal University, 2014 No1.[15] Taban, S. & Kar M.(2008), Development Economics, Ekin.[16] Tiryakioğlu, M. (2009), Schumpeter, Innovative and Creative Destruction, (http://ikti- sadiyat.com/2009/03/18/schumpeter- yenilik-ve-yaratici-yikim/[1]7 Ulku, H. (2004) ‘’R&D, Innovation, and Economic Growth: An Empirical Analysis’’, IMF Working Paper, WP/04/185, September 2004.[18] Zerenler, M., Necdet T. & Esen Ş. (2007), Relationship between Global Technology, Research and Development (R&D) and Innovation, Selcuk Univercity Journal of Social Sciences Institute, 17:653-667.

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BEYOND THE 2008 FINANCIAL CRISIS: THE NEW POLITICAL ECONOMY OF THE FOREIGN PAYMENT ISSUES IN TURKEY

Niyazi ÖZKERAssoc. Prof. Dr., Public Finance Department, Faculty of Economic and Business Administration,

Bandirma Onyedi Eylul University – 10200 \ TURKEY, [email protected]

Abstract

In this study, we aim to put forth the new political foreign payments approaches matters in the scope of basic structural evaluations including financial politics alterations in Turkey as a developing country. Hence, the matter of foreign payments balances should be over taken as a the fairly important component and macro financial option in order to cope with the negative remnants of global financial crisis especially for developing countries, like Turkey, after 2008. Financial crisis management has been harmed by the political foreign economically approach especially due to the failed foreign exchange policies in Turkey for a long time. In addition, it appears that Certain financial foreign exchange practices related to foreign payments balances have been meaningless to the financial policies to prevent the effects of 2008 in the deep financial distress. These related results in today's reasons are required to express this current foreign payments issue among current account deficits in the conclusions of new financial analysis. Because, it is understood the current deficits fact that has been directly come into existence via foreign payments levels bring up the meaningful financial affect levels which could be cored with on the economic growth in Turkey and that should be considered in the scope of new foreign payments politics. In this context, it has been considered to put forth required observable indicators of the crisis, and structural severity of the crisis within striking variables that can be linked to these talked of variables.

Key Words: Economic Development; Foreign Payments; Political Economy; Financial Crisis; Globalization Process; Foreign Exchanges ;

JEL Codes: E62; F31; F38; F62; F65.

1. IntroductionAfter 2008 recent financial crisis in Turkey, the framework of foreign payments balances has largely a important meaningful structure related to unsuitable exchange rate policies and unsustainable debt levels. This fact leads to currency crashes have preceded as well as looked for new debt crisis politics, and which leads us to ask the following some important questions. Is there is a link between foreign currency variables in touch with financial crisis and foreign payments defaults? What must be done to prevent debt crises in Euro zone countries? Alternatively, is it possible to prevent crisis with probably the structural and institutional alterations to the future? As a global financial crisis, 2008 crisis resulted in the important structural and political changes in developing countries like Turkey. Foreign payments risk in connected with government financial applications can arise from a number of sources especially in financial crisis periods, including:

First, it is important where the national imports or exports are from. Generally, these countries are in the trouble financial crisis, and some countries that have to cope with in period are (Rose and Spiegel, 2009: 27). On the other hand, where revenue from exports is received in foreign currency in these countries that need the new management issues of foreign payments where other income, such as royalties, interest, dividends etc., is received in foreign currency (Rodrik, 2012: 42). However, financial crisis politics, as the foreign payment issues that

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depend on especially results of globalization process have been taken an important place from 2008 financial crisis to current days. The financial situation the governments' loans are from denominated including payable in foreign currency take an important places in foreign payments balances operations. This fact means that governments should be function such as financial operations or subsidiaries that must be in valued within a foreign currency or foreign currency deposits in the financial crisis periods (Yendi et al., 2012: 49). Therefore, foreign payments risk can be also expressed being the risk that a government’s financial performance or position that will be affected by fluctuations in the exchange rates between currencies.

In addition the financial risk related foreign payments balances risks occurred in the financial crisis is the most acute for governments that deal in more than one currency especially in case of exporting product to another countries. This situation also causes the governments of less developed countries exposed to foreign exchange risk if their business relies on imported products and services. Turkey's foreign trade policy that directly affect foreign payment balances traditionally had been not subordinate to the country’s export development strategy before 2008 global crisis in the scope of been update (Rodrik, 2012: 49). After 2008 the demand for increased imports has exceeded the country's supply of foreign currency via global crisis effects and this financial phenomenon has caused forcing the government to set up extensive controls to cope with global financial crisis that cause important financial loss towards to new foreign. Therefore, after 2008 the content of new foreign politics has the desired mobilize foreign exchange to products essential for investment or production, but having to take into consideration foreign exchange balances before all else. Hence, the new political economy of the foreign payment in Turkey should give the aimed foreign payments balances some guidance towards to ensure increasing export levels in the scope of exchange rate (Temiz and Gökmen, 2010: 6).

2. The Structural View of Foreign Payment Problems along the 2008 Financial Crisis Process in Turkey.

It can be said that developments in growth, employment, inflation and exchange rates were to require answering questions that are related to the contribution of foreign financial components in the financial policies conclusion on collapse of national capital savings. In this respect, the role of financial movements with probably related to macro balances with the new foreign payment politics would have to be considered in structurally making explanation together with the extremely slow down of national investments and expressive rise in interest rates after 2008 (Priewe, 2010: 28). Figure (1) expresses the structural location and relations of these financial circumstances below2 (Shovlin, 2011):

2 Julian Shovlin (2011), Julian Shovlin Applied Finance: The Good and the Bad Merger/Acquisition (Topic 9) , December 11, 2011, https://appliedfinancejulianshovlin.wordpress.com/ (30.01.2017).

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https://appliedfinancejulianshovlin.wordpress.com/2011/12/16/the-good-and-the-bad-mergeracquisition-topic-9/


Figure (1) shows structural relations related to 2008 financial crisis in Turkey, especially in the framework of macro changeable as wholeness institutional obligations. It appears that interest rates increasing together along bank number’s overextensions risks have been the most important financial risk component as in being the other countries in Turkey. In respect of global 2008 financial crisis in Turkey have been due to unsuitable exchange rate policies and unsustainable debt levels (Kara, 2012: 16). But, also this financial phenomenon have affected currency crashes as well as came into current deficits increasing within the depended on financial values in Turkey. In the other words, foreign payments balances as resulting crisis have resulted in situated in variables negative signal currency related to debt defaults process that direct the crisis process politics. Beyond 2008 financial crisis, it can said that enterprise to escape from national investment has been the best important financial problem directly related to collapse of currency value (Kara, 2012: 17). This formation has brought forth of exchange rate risks in the scope of ruined in institutional monetary liquidity that result in the considered effects of crisis to especially current days too. Nevertheless increasing bank risks would have been the cause of increasing interest rates which means financial evaluation captures a subtle, as inevitable implication, the government's choice of its exchange rate system towards foreign payments problems. Therefore, financial crisis that of Turkey emphasizes indirectly the globally negative effects of a fixed exchange rate system applied by banks that related to foreign payments balances (Togan and Berument, 2007: 155). Surely, it should not be ignored that high interest rates cause with real exchange rate appreciation sudden stop in capital flows in Turkey. And this fact means which uneasiness in especially recently days towards to the aimed economic development should be supported and exceed

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via the trustworthy foreign payments together with new foreign payments issues (Kara, 2012: 13-14).

3. The Financial Alteration Options of Crisis Process in Turkey towards to Recent Years

After 2008 crisis process it has been understood that monetary policies is not sufficient within its own to catch the desired economic growth limits in the stability location. Because, it has appeared that trustworthy financial politics together with the rational finance channels and accurate effective foreign payments applications have been important roles on the national investments after global crisis. In the meantime, the dependence of foreign financing with foreign financial obligations are in the important causes that cause the financial fragility in Turkey (Kara, 2012: 15). In addition, current deficit positions and needed foreign debt increasing have affected on the sustainability economic growth for long years related to recent days in Turkey, which have connected with foreign payments.

After 2008 crisis, the financial alteration options have taken on shape these considered structural dynamics towards to occur the new foreign payments politics with these added structural reforms. It appears that the most important alteration is to determine structural effects on risk account process related to global financial crisis in a fast medium-term growth scenario (Aras, 2010: 117). Namely, as an important approach towards to alteration foreign payment balances, Turkey has needed to change on the current accounts aimed at decrease risk of bank account process and interest rates that are likely to emerge as investment will need to increase (Naude, 2009: 7). It means that structural alterations related to foreign financial values put forth to cope with crisis effects in a medium-term growth scenario.

Nevertheless, current foreign deficits should be limited means that foreign debtor obligations are to limited on borrowed money. In this situation, this fact increase to resistant location financial crisis location because of the financial system strong sustainability which should be in the new foreign payments politics. The crisis process has put forth a financial action plan that is supported via government expenditure politics in response to the negative alteration effects of crisis process in Turkey (Yörükoğlu and Atasoy, 2011: 400). In addition, this plan states the reform agenda of Turkey including developing of financial system together with comprehensive economic growth in the innovation process. Before all else, these financial structural reforms aimed at improve foreign payment transactions have based on the basic two financial arguments. First of all, "Promoting Trade and Investment Openness with Enabling Financial Environmental Competition", and second "Improving and Strengthening the Financial System in a Promoting Inclusive Economic Process" (TCMB, 2016: 6). In this framework alteration, all these constructer alteration options aim to decline the foreign payments costs directly related to changes in the value of a local (or national) currency denominated fiscal transaction options, which will ensure to contribute in new foreign payments politics.

Therefore, as the biggest payments costs interest payments that occur with a currency's exchange rate increasing in the same process have two effects possibly to bear in mind after 2008 crisis process that have taken into consideration: First, as the most important public revenues of government, tax revenues are to be increased together with other revenues which

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aim to increase real output that assist in increasing real GDP. Second, preventing the exchange rate system that have negative effects on foreign payments and again clearly determining the extent to which financial misalignment can contribute to how these changes from point of constituting new foreign payments politics (Seval and Özdemir, 2013: 12-13).

The other expressing of the approach is that exchange rate policy should exert meaningful direct effect on monetary policy via central bank options to ensure truly foreign payments politics. In addition, the foreign trade policy in the financial alteration options of crisis process has been affected via recently foreign payments policies, but this political alteration has expressed that the loss of national money values has resulted increasingly in foreign investments in the stock exchange to recent years. Namely, it appears that is possible to perceive, as this financial seen, that current deficits is the main important foreign resource inflow in the same period in 2011 due to loss value of national money. This fact became a reality that has created foreign investment resources in spite of increasingly current deficits after 2008. Also the effects of institutional features has been appeared that has not possible to be ignored in crisis process, which effect current deficits of foreign payments that means structural differences related to after 2008 crises (Seval and Özdemir, 2013: 22-23).

But, in spite of all alterations, macroeconomic policy differences that has aim to decrease current deficits only play a limited role in explaining cross-country volatility differences via the institutional rank. Unfortunately It means that the macroeconomic policy differences have not ensured the financial alteration options like desired to presently days, which especially goal to under control foreign payments unbalanced. In this respect, foreign payments policies and the structural institutional differences have been experienced in being contradiction within each other towards to resolve foreign payments after 2008 crisis in Turkey, which especially express to cope with current foreign deficits (Cömert and Çolak, 2014: 17). Nevertheless, it can be say that the foreign resource inflows have been adequate after 2008 in spite of the institutional does not satisfaction, which are effective on meeting important percent of the foreign deficit (Rawdanowicz, 2010: 7-8). Also, the great amount of foreign currency that is stashed abroad has been brought into the country via the new financial alteration options of crisis process after 2008 crisis in Turkey which means that it have been brought to a successful conclusion via these financial alterations related to presently days.

4. The Appearance of New Foreign Payment Policies to Prevent Financial Matters in Turkey

First, the independent variables like exchange and inflation rates as being the revised macro values have placed in the rational decisions for recently years in the scope of the more realistic exchange rate (TCMB-a, 2016: 51-51). It seems that instability capital saving outflow has been more affected by these independent variables, which especially should be prevented together with exchange policies application risk. In addition, the highly domestic interest rates in the same process have increased the concerned foreign payments as one other risk that should be prevented after 2008 crisis.

4.1. The Structural Appearance of New Payment Policies on the Ground of Institutional Relations

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All these macroeconomic components are that should be considered in the new foreign payment policies and government fiscal management have to attain these new stabilization programs particularly via reconstruction fiscal management to reach the desired situation. However, Turkey, as a developing country, with its own currencies also had exposed more devaluation risks with the financial sectors in the scope of currency policies which must prevent to the periodical risk, and that situation has constituted the contains of new foreign payment policies (TCMB-b, 2016: 49-50). For such reasons, we prefer the natural institutional diagnostic logarithm of Turkey financial management relation in our analysis of potential solutions. It is possible to address this structural location as diagonal diagram below:

Figure 2. express the financial alteration relations on the ground of exchange politics including the considered probably overextension banks and financial liquidity beyond traditional banking regulation increased. As seen on figure 2, the priority goal of payment policies ensure to balances between interest rates and overextension bank liquidity and then in this point the most meaningful financial component is to prevent deviation with collapse of currency values. That related to this situation the second other important component that prop up the new foreign policies is to prevent collapse of depositors confidence, but bring to a successful conclusion have not recourse to submit an application to foreign financial

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Figure 2. The Structural Appearance of New Foreign Payment Policies to Ensure Foreign Balances Stability in Turkey


resources like IMF. In this way, it has been aimed of that both prevent to collapse government fiscal management and capital saving outflow via new foreign payment policies. Undoubtedly, between this commonly-cited causal components and our crisis indicators current account deficits fact are to measure with currently performance, and that relationship is completely significant to constitute a positive correlation between monetary and fiscal policies (BPC, 2015: 21).

However, it is quite difficult to become clear apparent these financial policies to ensure foreign payment balances because of cannot be easily quantified with observable data to occur in the political making process. But it should not be ignored that in the traditional foreign payments policy implementation, in which current accounts stability to foreign payments is the only objective and the short term policy rate is the single tool, the central bank need to have a separate impact on foreign exchange. As seen on the figure 2, this phenomenon that come true via foreign exchange deposit account and exchange rate channels have to ensure the net impact of these channels on exchange and domestic interest rates through financial institutional like banks for preventing foreign payment unbalances. This fact related to new payments put forth that determine a new financial mechanism means a case of foreign payments targeting regime in where current accounts deficits overshoots the financial deficits target. The approach that is meaningful in the scope of the new financial politics due to acceleration in domestic demand, which take part in the new foreign payments policies can be expressed that is main structural of these policies to prevent to foreign payment unbalances related to financial values.

In addition to, some problems overcame, like preventing capital escape to abroad, directly related to foreign payments balances have been in part of these policies as the second most aimed in the preventing account deficits policies. No doubt, it has been not ignored the national exchange politics after 2008 financial crisis to effort to financial stabilize especially with balanced interest rates politics (BPC, 2015: 11). Still it is not possible to say that Turkey' new financial policies is sufficient to ensure foreign balances stability in Turkey in spite of attain the aimed some remarkable outcomes. As all crises, it can be said that Turkey's financial crisis politics have based on three main politics dynamic to ensure rational decisions and probability of fiscal default. As seen on figure 2, the priority approach is that check overextension banks and financial liquidity. The secondary important approach that has been taken place in the new foreign payment politics is the preventing collapse of depositors' confidence, which aim to provide a associated forum to both the other financial market options and decision makers to advance theory and application in the fields of business. The thirdly important risk component that directly related to market balances is the applications risk of exchange politics, and the free-floating exchange rate policy that has been applied for a long time in Turkey can occasionally reveal the element of risk because of incompatibility with interest rates found in practice.

4.2. The Discussion of the Results of New Payment Policies in Turkey

The result effects of the new payment policies put forth meaningful structural alteration values after 2008 global financial crisis. In this context, after 2008 crisis current account deficits indicators express important alteration of financial stabilization values that the

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balance of payment data that covers foreign currency movements of the Jan.-Nov., 2015 including portfolio investment and other investments loans and bank deposits remained. In addition, the total amount of registered capital inflow to Turkey in the forms of direct investment have shown remarkable increasing in the last period after 2008 crisis, which mean that current deficits has been became smaller to previous years. In sum, the other foreign inflow made up of loans and bank accounts values were not alterations in 2014 (Kalkınma Bakanlığı, 2015: 86 and 128).

This foreign financial values that stated the same amount 2015 year as loans and bank accounts mean balance of external payments stabilized via new political approaches. But, with foreign currency inflow falling at this extent, the price of the dollar against the Turkish Lira went up fast in 2015. And this fact has provoked to increase exchange rates beyond to national currency that put forth failure of new foreign payment policies. Certainly, the measurement of these policies to stabilize current account deficits require to be also understood both stock and flow measure in the basic of the net external position as Dollar-based, which is fairly meaningful the current account as percentages of GDP. Therefore, these measurements should include both measures of the severity of current account imbalances and the adequacy of holdings of foreign reserves measures of the external balance position. Figure 3 express the current account balance values formed through new payment policies in Turkey’s last period below (Kalkınma Bakanlığı, 2015, 102-104):

As seen on Figure 3, Turkey’s foreign current account deficits experienced remarkable decrease Dollar-based from 2014 to 2015. In other words, the fact that was capital inflow decreased, but the current account deficits position decreased due to foreign currency values substantially taken into positively. It is not wrong to interpret because of new foreign payment policies. In this respect, preventing the foreign capital from escaping abroad can be expressed as the most important success of these policies, which is clearly visible in Figure 3. Given that the current account deficit is one of Turkey's most important financial problems, it is clear

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Figure 3. The Appearance of Current Deficits as Foreign Payment Balances in the Last Period of Turkey


that how important and meaningful such a reduction in current account deficit positions after the 2008 crisis. Certainly, the understood effect levels of these policies require to comparison the other macro results in the same period that also include central government budget options in the practice.

However, the structural positive impact of new foreign payment policies cannot be ignored in this external financial balance problem, which is the most important problem of Turkey. It can be said that the negative effect of the negative effect on the balance of payments for the year 2015 is the decrease in foreign capital inflow. Indeed, this situation has caused a significant deviation in the foreign exchange reserves of the Central Bank of the Republic of Turkey. It means that foreign direct investment inflow remained at $9.2 billion in the first 11 months. But we should pay attention that $3.7 billion of this was real estate investment in 2015. Despite an increase in portfolio investments in the January-November period of 2014, it was inevitable that the external payment policies would be questioned again, as a decline of approximately $15 billion in the three-month period until 2015 has taken place (Deloitte, 2015: 4-6).

According to us, an important factor in Turkey's failure to implement new payment policies that took place in the post-crisis period of 2008 is that in the same period in 2014, foreign currency inflows amounted to 19 billion dollars, and in 2015 approximately 15 billion dollars’ worth of money was withdrawn. As a consequence of the new foreign payment policies and, of course, as a result of these policies, the price of the dollar against the Turkish lira has risen rapidly, exceeding 3.72 liras in the last month of 2016, as foreign currency inflows fall in this direction (Maliye Bakanlığı, 2016: 48-50).

In addition, it can say related to the current account deficits’ importance its meaningful in the two alternative structural terms for Turkey. First, deviations in capital inflows are likely to be linked to increasing export trends, partly by 2015, relative to 2014. That is, the dependence of foreign capital has partially decreased after the increase in exports, and the foreign capital seen in the import-oriented business has decrease is also partly due to the fall effect as seen on presently days. Therefore, even if capital inflows decrease for Turkey, it is not seen important matter to ensure budget balances related to cope with current account matters. Secondly, financial reserves decreased in 2015, as seen on the figure 3, is perceived probably as if its the important financial matters. However, Turkish Public Central Bank's financial power that it's foreign exchange deposits have been in the pretty good conditions has been ignored in the same period since 2008 crisis. The most striking concrete indicator of this situation is undoubtedly the net increase in net financial assets in Turkey in 2015, which again points to a further decline in current account deficits in 2017 and a more stable public budget. But, in this point the more important point under consideration for us is that American Dollar may increase keeping on that effect directly budget deficits together with current deficits. Increasing Dollar is not only negatively financial phenomenon related to foreign payments issues, but also the is fact that affect negatively on export sector improvement to ensure the desired economic growth levels that maintain essentially to contribute in all macro financial balances.

5. Conclusion

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The new political economy of Turkey's external payment problems, which set new goals with the changes in practice after the 2008 financial crisis, aimed at significant balances of external payments along with significant structural changes. It seems difficult to say at present that after 2008, the reduction of current account deficits with a different political approach and the achievement of financial success in institutional relations have produced very striking positive results. The institutional formations arrived could not also resolve in inferior institutional features including suffer from increased macroeconomic volatility to the extent especially if even after controlling for institutional as the financial alteration options in Turkey.

The decline in the gap between import and export options after the global financial crisis of 2008 was again due to the positive impact of these policies and financial relaxation was a matter of short turnaround in the balance of payments. Indeed, of course, the main aim here is to improve Turkey's long-standing macroeconomic imbalances positively, as well as create a stronger banking infrastructure than before with strong monetary policies. It is possible to say that these targets have been achieved, at least partially, through striking new foreign payment policies. But the new political economy of the foreign payments in Turkey could not direct the aimed foreign payments balances to ensure increasing export levels in the scope of exchange rate effecting positively currently deficits. In this point, it can say that Turkey has been also rather exposed to the collapse of international trade and trade credit, other effective features of the 2008 crisis.

It is possible to base this on two main factors in the context of these policies: Firstly, the aimed structural alterations directly related to financial institutions like banks have not come true in the desired levels. And this phenomenon have resulted in banks' control in practices as especially in increasing interest rates, which route exchange rate policies. The rise in the value of the national currency has led to a further increase in current account deficits by increasing imports. Secondly, foreign capital inflow has not been sufficiently in the spite of current deficits decreased due to the rates of exchange extremely alternating after 2008 year, which is a confidence element. Although the new political economy of the foreign payment issues have a very well theoretical contains, the concerned results have been far from the desired political aim to ensure integrating to nowadays which is in especially the globalization process.

After 2008 crisis, it is eventually important that financial reserves’ level. But its financial net accounts related to Central Bank Accounts provided towards to deal with probably financial crisis in the future due to its potential importance have more importance. Even if Turkey's new foreign payment policies have based on the public budget financial options, but still it appears that need the other radical alterations including macro economic balances as well as banking regulations. That's why, the foreign payments problem should not be considered the only one matter of the financial issues of Turkey, even if it's merely removing from other financial things for evaluating probably financial crisis in the future. Beyond 2008 crisis to the future the being talked of major structural changes should put forward also the complicated financial applications options like especially the other reasons of extremely slow down of national investments and expressive rise in interest rate to ensure the new approaches of foreign payments.

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