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Internationalisation, growth and pay inequality: a cointegration analysis for Turkey, 1970--2007


  • Adem Y. Elveren
  • Ibrahim Örnek
  • Günay Akel


The nature of the internationalisation-growth-inequality nexus is very complex; and therefore, not surprisingly, there is no consensus on whether increasing openness to trade leads to higher inequality or not -- in fact, there is even no full understanding on the impact of the openness on the economic growth. In the case of Turkey it is observed that there is relatively little empirical work that addresses the issue of inequality. Considering this fact, the study aims to provide some more evidence on the complex relationship between trade openness, foreign direct investment, economic growth and pay inequality by utilising a combination of different Theil Indices of pay inequality. The paper utilises the Johansen Cointegration and Granger Causality methods. Our findings yield that higher economic growth resulting from trade openness comes with higher pay inequality.

Suggested Citation

  • Adem Y. Elveren & Ibrahim Örnek & Günay Akel, 2012. "Internationalisation, growth and pay inequality: a cointegration analysis for Turkey, 1970--2007," International Review of Applied Economics, Taylor & Francis Journals, vol. 26(5), pages 579-595, September.
  • Handle: RePEc:taf:irapec:v:26:y:2012:i:5:p:579-595
    DOI: 10.1080/02692171.2011.624499

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    References listed on IDEAS

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    6. Gouverneur, Jacques, 1990. "Productive Labour, Price/Value Ratio and Rate of Surplus Value: Theoretical Viewpoints and Empirical Evidence," Cambridge Journal of Economics, Oxford University Press, vol. 14(1), pages 1-27, March.
    7. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-1580, November.
    8. Gonzalo, Jesus, 1994. "Five alternative methods of estimating long-run equilibrium relationships," Journal of Econometrics, Elsevier, vol. 60(1-2), pages 203-233.
    9. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    10. Roemer, John E, 1982. "Exploitation, Alternatives and Socialism," Economic Journal, Royal Economic Society, vol. 92(365), pages 87-107, March.
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    Cited by:

    1. KARGI, Bilal, 2014. "Portfolio in Turkish Economy, and A Long Termed Relation Between Foreign Direct Investments and The Growth, and The Structural Breakage Analysis (1980-2012)," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 70-81.
    2. Domenico Rossignoli, 2015. "Too many and too much? Special-interest groups and inequality at the turn of the century," Rivista Internazionale di Scienze Sociali, Vita e Pensiero, Pubblicazioni dell'Universita' Cattolica del Sacro Cuore, vol. 130(3), pages 337-366.

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