The Relationship Between Economic Freedom and Export Concentration in Turkey: A Time-Varying Causality Analysis Using Theil Indices
Chapter from the book: Sevinç, H. & Eroğlu Sevinç, D. (eds.) 2025. Current Research and Applications on International Economics II.

Muharrem Akın Doğanay
Karadeniz Technical University
Mustafa Kemal Değer
Karadeniz Technical University

Synopsis

The acceleration of globalization after World War II and, in particular, the widespread adoption of neoliberal reforms since the 1980s have strengthened liberalization, privatization, and openness in developing countries, bringing the relationship between economic freedom, growth, and trade to the forefront of empirical research. This study examines the causal relationship between economic freedoms and export concentration/diversification—measured by Theil indices—in Türkiye over the period 1995–2024 using a time-varying Granger causality test. The findings indicate that these relationships are not constant but intensify during specific sub-periods. While a persistent and strong causality from economic freedoms to overall export diversification is identified, the relationships with product and market diversification are more episodic in nature. In addition, evidence of reverse causality—from export structure to economic freedoms—is also observed. These results suggest that, in the case of Türkiye, the link between economic freedoms and export concentration/diversification is neither stable nor unidirectional; rather, it is dynamic, time-varying, and partially reciprocal. The findings support the view that a stable and high level of economic freedom provides a favorable long-term environment for the structural transformation of exports. However, it should be noted that this relationship may be influenced by short-term policy shocks and global economic conditions, and that the effects may differ across sub-components.

How to cite this book

Doğanay, M. A. & Değer, M. K. (2025). The Relationship Between Economic Freedom and Export Concentration in Turkey: A Time-Varying Causality Analysis Using Theil Indices. In: Sevinç, H. & Eroğlu Sevinç, D. (eds.), Current Research and Applications on International Economics II. Özgür Publications. DOI: https://doi.org/10.58830/ozgur.pub1134.c4663

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Published

December 29, 2025

DOI