The Effect of Changes in the Political Climate on Intercountry Trade: An Econometric Analysis on Turkey-Russia Aircraft Crisis
Esin Can Mutlu, Saniye Yıldırım Özmutlu, Cansu AykaçThe core components of the political environment are ideological climate and political processes, nationalism, interventions of governments and political stability. The effects of these changes on international trade are accepted reality in terms of scientific community, countries, and businesses. For this reason, the aim of this paper is to investigate the effect of the political crisis between Turkey and the Russian Federation after the airplane crises on November 24, 2015. Thus, the effect of commercial relations between the two countries by linking variables has been shown in a quantitative study. The study has three parts. In the first part, we look at the political risk concept and political and commercial relations. In the second part of the study, the political crisis is the independent variable and control variables are the CPI-based real effective exchange rate, the monthly percentage change in the CPI and industrial production index. The Turkey-Russia trade volume is considered as the dependent variable. We analyzed the effect of the political crisis on foreign trade volume within the scope of these variables. In order to show the effect of political relations on the foreign trade volume between Turkey and the Russian Federation, a time series regression analysis was conducted with the STATA program. In addition, changes in foreign trade volume were explained with charts obtained by digitization of the Turkey Statistics Institute (TUIK) and the Central Bank (MB) reports. As a result of these analyses, it is concluded that the political crisis has had a meaningful and a negative effect on foreign trade volume. In other words, the reality in the literature is examined by studying a concrete case. In the last part of the study, the results obtained were evaluated and recommendations were made.
Politik İklim Değişikliklerinin Ülkelerarası Ticaretle İlişkisi: Türkiye Rusya Uçak Krizi Üzerine Ekonometrik Bir İnceleme
Esin Can Mutlu, Saniye Yıldırım Özmutlu, Cansu AykaçPolitik çevrenin temel bileşenleri; ideolojik iklim ve politik süreçler, milliyetçilik, yönetimlerin müdahaleleri ve politik istikrar olup, bu bileşenlerdeki değişimlerin ülkelerarası ticareti etkilemesi hem bilimsel hem de ülkeler ve işletmeler açısından kabul görmüş bir gerçektir. Bu gerçekten hareketle, çalışmanın amacı; 24 Kasım 2015 tarihinde Türkiye-Rusya Federasyonu arasında yaşanan uçak krizi sonrasında oluşan politik riskin iki ülke arasındaki dış ticaret hacmini nasıl etkilediğini ortaya koymak oluşturmaktadır. Böylece değişkenler arasında bağlantı kurarak iki ülke arasındaki ticari ilişkilerin etkisi nicel bir çalışma üzerinde gösterilmiştir. Çalışma üç bölümden oluşmaktadır; İlk bölümde politik risk kavramı, politik ve ticari ilişkiler kapsamı üzerinde durulmuştur. İkinci bölümde, bağımsız değişken olarak politik kriz, kontrol değişken olarak TÜFE bazlı reel efektif döviz kuru, TÜFE’nin aylık yüzdelik değişimi, Sanayi üretim endeksi, bağımlı değişken olarak Türkiye-Rusya dış ticaret hacmi ele alınmıştır. Ele alınan bu değişkenler kapsamında politik krizin, iki ülke arasında dış ticaret hacmi üzerine etkisi incelenmiştir. Çalışmada; politik riskin oluşması sonucunda Türkiye-Rusya Federasyonu arasındaki ticari ilişkilerin dış ticaret hacmi üzerindeki etkisini gösterebilmek amacıyla, STATA programı kullanılarak zaman serisi regresyon analizi yapılmıştır. Ayrıca Türkiye İstatistik Kurumu’ndan (TÜİK) ve Merkez Bankası’ndan (MB) alınan raporların sayısallaştırılması ile eldeki verilerin grafiklere yansıtılmasıyla dış ticaret hacmindeki değişim açıklanmaya çalışılmıştır. Yapılan analizler sonucunda politik krizin dış ticaret hacmi üzerinde negatif yönde ve anlamlı bir etkisinin olduğu sonucu elde edilmiştir. Başka deyişle; literatürde yer alan gerçek, somut bir olay üzerinde incelenerek ortaya konulmuştur. Çalışmanın son kısmında elde edilen sonuçlar değerlendirilmiş ve öneriler de bulunulmuştur.
Considering that there are nearly two hundred countries in the world today; the economic, socio-cultural and political situation of each state differs from one another. These differences occur according to the political and bureaucratic traditions of the countries, the nature of the political regime, the party or social groups that hold political power, the level of development of the countries, and the characteristics of the historical process in which they exist etc. For this reason, the aim of this paper is to investigate the effect of the political crisis between Turkey and Russian Federation after the airplane crises on November 24, 2015. When examined in the context of economic and political relations, Turkey downed the Russian Federation’s plane on November 24, 2015 which added another strain to already turbulent Turkey and Russia relations. The crisis that took place on November 24, 2015 was the biggest crisis in the recent period.
The scope of this study is the reflection of political risk on commercial relations between Turkey and the Russian Federation. There is a comprehensive list of academic studies on business issues which have already been carried out such as Tourism relations, energy relations etc. However, the scope of this study - the effect of the aircraft crash on Turkey’s import and export values – is not from an academic perspective. The study has three parts. In the first part, we look at the political risk concept and political and commercial relations. In the second part of the study, a time series regression analysis was conducted with the STATA program. In the last part of the study, the results obtained were evaluated and recommendations were made.
After Turkey downed the aircraft belonging to Russia on November 24, 2015, it faced a weakening of its strong trade relations with the Russian Federation. The aim of this study is to investigate the effect of trade relations between the two countries in terms of the volume of foreign trade as a result of political risk. The effect of commercial relations between the two countries by linking variables has been shown in a quantitative study. For this purpose, a time series regression analysis was performed in the STATA program. The data was constituted with the Turkey Statistics Institute (TUIK) and the Central Bank (MB) reports. The political crisis is the independent variable and the control variables are the CPI-based real effective exchange rate, the monthly percentage change in the CPI and industrial production index. The Turkey-Russia trade volume is considered as the dependent variable. We analyzed the effect of the political crisis on foreign trade volume within the scope of these variables. Monthly values of the data are used in the study and the time series covers the period from January 2005 to November 2017. The regression coefficient of the CRIS variable was negative (- 507). As mentioned in the literature, the political crisis between the two countries caused a decrease in the trade volumes of the countries. In this context, the hypothesis that political risk leads to disruption of international trade relations has been supported.
In addition to the regression analysis, changes in the volume of imports and exports are shown with the help of graphs. The results obtained from the regression analysis and the drawn graphics were supported and decreases in the volume of imports and exports are shown in the graphs. The lowest import volume with the Russian Federation was observed in the subsequent months after the aircraft crises covering Russia’s sanctioning period. Traces of the political crisis created by the aircraft crisis were observed a year
after the incident. In 2016, both import and export data were generally low. The levels of imports and exports seen in the data of 2015 could not be reached in 2017 but they paint a better picture than the levels in 2016.
In this study, Turkey’s downing of an aircraft belonging to the Russian Federation and the implication of this event, consisting of political risk on commercial activities, was analyzed with time series regression and examined through two years of data shown in before and after graphs. As a result of the study, we can see that the political crises has had an effect on import and export volumes and also the severity of the crises has affected communication between the countries and the process of re-engaging in business activities. Economic relations between Turkey and Russia are sensitive to political events. It can be said that Turkey’s strategies implemented after the crisis were not successful because Turkey’s export data still has not reached that of 2014.
In conclusion, the political crises between the two countries have had a negative impact on the commercial activities of the countries. In order for political crises to have less negative impacts on the commercial activities of countries, it may be advisable to establish a partnership rather than a direct investment in countries with high political risks.
