Import Dependency of Exports as a Cause of Current Account Deficit

  • Nalan Terzioglu Mugla Sitki Kocman University
  • Turan Subasat Mugla Sitki Kocman University
Keywords: import dependency of exports, current account imbalances, global value chains, international trade

Abstract

The rapid increase in import dependency of exports and current account imbalances in many countries over the last two decades led many researchers to argue that they may be correlated and the increase in IDE may be the main cause of current account imbalances. This argument is important because historical evidence suggests that large and persistent current account imbalances often lead to subsequent corrective crisis. If the increase in IDE is a major cause of current account imbalances, reducing it becomes an important policy option to prevent further crisis. While there is a large literature on both global value chains (the main cause of IDE) and current account imbalances, the literature that investigates the link between them is very new and limited. This paper aims to contribute to this limited literature.

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Published
2018-06-30
How to Cite
Terzioglu, N., & Subasat, T. (2018). Import Dependency of Exports as a Cause of Current Account Deficit. Central European Review of Economics & Finance, 25(3), 37-49. https://doi.org/10.24136/ceref.2018.014
Section
Articles