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Current Issues in Economy and Management

Multidisciplinary Perspectives

by Ragıp Pehlivanlı (Volume editor) Nurettin Bilici (Volume editor)
©2019 Edited Collection 264 Pages

Summary

The editors of this book combine new approaches in economy and business administration. The topics of this book range from tax policy, accounting information systems, banking in Turkey, work safety, gender pay gaps and social media marketing to e-municipality processes and Islamic indices.

Table Of Contents

  • Cover
  • Title
  • Copyright
  • About the author
  • About the book
  • Citability of the eBook
  • Table of Contents
  • List of Contributors
  • Mortaza Ojaghlou and Nebiye Yamak: Tourism Sector and Dutch Disease: The Case of Turkey
  • Pelin Ügümü Aktaş: Analysis of Diamond Ring Commercials in the Frame of Symbolic Consumption
  • Hakan Yavuz: Tax Policies Concerning Lowering the Emission of Greenhouse Gas: An Assessment Specific to Turkey
  • Ali Apalı and Mesut Bozcu: Interaction Between Accounting Information Systems and Other Information Systems Created in Terms of Functionality
  • Orkun Bayram: Evaluation of Participation Banking in Turkey from the Perspective of Performance and Positioning and Suggestions for Growth
  • Selahattin Kaynak and Miraç Eren: Forecasting Turkish Manufacturing Industry’s Sales Income and Export by Genetic Algorithm–Based Grey Model-GAGM (1, 1)
  • Türkmen Taşer Akbaş and Bülent Arpat: The Relationship Between Demographic Variables and Work Safety Communication Attitudes of Managers: Example of Metal Industry in Denizli (Turkey)
  • Birol Erkan and Elif Tuğçe Bozduman: The Level of Innovation in Russia’s Exports and Analysis of Global Competitiveness
  • Zuhal Önez Çetin: An Overview on E-Municipality Process in Turkey
  • Pınar Evrim Mandacı and Özge Bolaman Avcı: Long and Short-Term Relationships Between Islamic Indexes and Their Conventional Counterparts: Is There an Opportunity of Diversification?
  • H. Işıl Alkan and Bora Alkan: The Issue of Gender Pay Gap: How to Combat?
  • Sadiye Oktay, Serdar Bozkurt, and Kübra Yazıcı: The Concept of Professional Skepticism in Auditing: Content Analysis for Databases
  • Murat Koçyiğit and Murat Çakırkaya: A Research on Evaluating the Effect of Interactive Communication on Consumer-Based Brand Equity in Terms of Social Media Marketing
  • Fevziye Kalıpçı Çağıran and Alp Eren Kayasandık: Corporate Governance Rating and Profitability in Borsa İstanbul
  • List of Figures
  • List of Tables

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List of Contributors

Asst. Prof. Türkmen Taşer Akbaş,

Pamukkale University, Faculty of Economics and Administrative Sciences, takbas@pau.edu.tr

Asst. Prof. Pelin Ügümü Aktaş,

Antalya AKEV University, Faculty of Art and Design,

pelin.aktas@akev.edu.tr

Lec. Bora Alkan,

Ondokuz Mayıs University, Faculty of Economics, Administrative and Social Sciences,

bora.alkan@omu.edu.tr

Asst. Prof. H. Işıl Alkan,

Ondokuz Mayıs University, Faculty of Economics, Administrative and Social Sciences,

isilalkan@omu.edu.tr

Assoc. Prof. Dr. Ali Apalı,

Mehmet Akif Ersoy University, Vocational School,

aapali@mehmetakif.edu.tr

Asst. Prof. Bülent Arpat,

Pamukkale University, Honaz Vocational School, barpat@pau.edu.tr

Asst. Prof. Orkun Bayram,

Antalya Bilim University, School of Business and Social Sciences,

orkun.bayram@antalya.edu.tr

Asst. Prof. Özge Bolaman Avcı,

Adnan Menderes University, Faculty of Economics, Department of Business

Administration, ozge.bolaman.avci@adu.edu.tr

Lec. Mesut Bozcu,

Akdeniz University, Elmalı Vocational School,

mesutbozcu@akdeniz.edu.tr

Elif Tuğçe Bozduman,

Uşak University, Faculty of Economics and Administrative Sciences,

tugcebozduman@gmail.com

Assoc. Prof. Dr. Serdar Bozkurt,

Yıldız Technical University, Faculty of Economics and Administrative Sciences,

sbozkurt@yildiz.edu.tr

Res. Asst. Dr. Fevziye Kalıpçı Çağıran,

Ondokuz Mayıs University, Faculty of Economics and Administrative Sciences,

fevziye.kalipci@omu.edu.tr

Asst. Prof. Murat Çakırkaya,

Necmettin Erbakan University,

Faculty of Applied Sciences, mcakirkaya@konya.edu.tr

Asst. Prof. Zuhal Önez Çetin,

Uşak University, Faculty of Economics and Administrative Sciences,

zuhal.cetin@usak.edu.tr

←7 |
 8→

Asst. Prof. Miraç Eren,

Ondokuz Mayıs University, Faculty of Economics, Administrative and Social Sciences,

mirac.eren@omu.edu.tr

Assoc. Prof. Dr. Birol Erkan,

Uşak University, Faculty of Economics and Administrative Sciences,

birol.erkan@usak.edu.tr

Res. Asst. Dr. Alp Eren Kayasandık,

Ondokuz Mayıs University, Institute and Graduate School of Social Sciences

Prof. Dr. Selahattin Kaynak,

Samsun University, Faculty of Economics, Administrative and Social Sciences,

selahattin.kaynak@samsun.edu.tr

Assoc. Prof. Dr. Murat Koçyiğit,

Necmettin Erbakan University,

Faculty of Tourism,

mkocyigit@konya.edu.tr

Prof. Dr. Pınar Evrim Mandacı,

Dokuz Eylül University, Faculty of Business, Department of Business Administration,

pinar.evrim@deu.edu.tr

Dr. Mortaza Ojaghlou,

Karadeniz Technical University, Faculty of Economics and Administrative Sciences,

mojaghlou@hotmail.com

Asst. Prof. Sadiye Oktay,

Yıldız Technical University, Faculty of Economics and Administrative Sciences,

sadiye@yildiz.edu.tr

Prof. Dr. Nebiye Yamak,

Karadeniz Technical University, Faculty of Economics and Administrative Sciences,

nyamak@ktu.edu.tr

Asst. Prof. Hakan Yavuz,

Sakarya University,

Faculty of Political Science,

hyavuz@sakarya.edu.tr

MBA Student Kübra Yazıcı,

Yıldız Technical University,

Graduate School of Social Science

kubrayazicii21@gmail.com

←8 | 9→

Mortaza Ojaghlou and Nebiye Yamak

Tourism Sector and Dutch Disease:
The Case of Turkey

1 Introduction

The term “Dutch Disease” was first used by The Economist in November 1977. In the related article of the journal, the possible effects of the natural gas resources in the Netherlands on the economy in 1959 were written and the macroeconomic effects of this situation were examined. According to the same paper, the Netherlands, which imported natural gas before 1959, had become a natural gas exporter with the discovery of natural gas resources, thus obtaining a high amount of foreign exchange income from natural gas exports. The rapid increase in the inflow of foreign currency to the country caused significant increases in the prices especially in the prices of non-tradable goods. It was observed that these increases caused the Netherlands to lose its competitiveness significantly in the industrial sector and therefore the economic growth rate approached to almost zero.

The advantages of natural resource exports on the economy, as well as some disadvantages such as the Dutch example, have been the subject of theoretical and empirical research from time to time. The negative effects of the natural resource wealth on the economy were first investigated by Meade and Russell (1957) for the Australian economy. According to this study, the excessive international demand for raw material has had a positive effect on the balance of payments in Australia in the first stage, but in the long run this effect has turned negative. Because, the increase in the export of raw materials raised first the export prices, then the wages and industrial costs. After a certain period, these changes created a substitution effect between export and import.

Although there were many empirical studies on the subject, the theoretical background of the Dutch disease could only develop in the 1980s. Theoretically, Dutch disease was first investigated by Corden and Neary (1982) and Corden (1984). They, in their study, proposed the Basic or Core Model of Dutch disease. They divided the economy into three different sectors. Through the rapidly developing sector, they investigated the development of non-tradable goods sector by using general equilibrium analysis. They also found that the development of the non-tradable goods sector caused a contraction in the tradable goods sector. In particular, this contraction was observed in the ←9 | 10→industrial sector. Thus, they identified the Dutch disease with the concept of deindustrialization.

The Dutch disease affects the economy through two different channels, namely the expenditure and production resources movement. The size and type of these effects differ by the economic characteristics of the countries. Thus, this diversity has negatively affected economic growth in some countries and increased inflation, current account deficit, and unemployment. It has even caused economic contraction in some countries. Even in some countries, it only changed the production characteristics and balance among sectors. The symmetric change in the volume of production and employment only decreased the industrial sector or the share of the industrial sector in GDP. In the current literature, all these effects have been examined within the scope of the Dutch disease.

In the empirical literature, after the basic Dutch disease model, the disease has been investigated mostly for the countries which are rich in natural resources. In particular, the macroeconomic impacts of oil by the OPEC countries, which have significant oil resources, were analyzed in the context of deindustrialization. However, it is clear that the Dutch disease is not only limited to natural resource exports, but it also carries a risk for all sectors and economic activities that may lead to foreign exchange inflow, except for the industrial sector according to the basic Dutch disease model. As possible risky sectors and economic activities, tourism sector, workers’ money transfers, money transfers made for aid (e.g., health, education), agricultural products exports, and migration factors can be shown.

Copeland (1991) has argued that the development of the tourism sector in the long term may lead to deindustrialization and welfare loss. Copeland (1991) explored the effects of the growth in tourism sector on the welfare, output, and factor prices of host country by using general equilibrium and international trade models. In his study, Copeland (1991) claimed that the development in the tourism sector could lead the country host to tourism or to the Dutch disease by means of production factor movement and expenditure effects. Furthermore, Chao et al. (2006) expressed that the increase in the price of non-tradable goods will negatively affect the accumulation of capital in the short and medium run and reduce the welfare of the country in the long run. Some of the advantages that the tourism sector has achieved in the short term help governments temporarily solve some problems. In such a case, the income from the tourism sector is similar to the income from the export of natural resources. The rapid growth in the tourism sector or natural resources in the short term can be seen to be desirable, but this also raises the necessity of reallocation of production resource. On the other hand, in order to gain more income, workers move to the service sectors by leaving their jobs in the traditional and industrial sectors, which may ←10 | 11→lead to a decrease in the production of these sectors by affecting the redistribution of resources, industrial and agricultural sectors, and the Dutch disease or beach disease according to Holzner (2011).

The tourism sector is considered as an important source of foreign exchange inflows in Turkey. Especially in the last 20 years, very important progresses have been taken in this sector. The effects of this sector on macroeconomic indicators have been the subject of interest in the context of Dutch disease. There are almost no studies analyzing the Turkish tourism sector within the framework of the Dutch disease concept. The purpose of the present study is to econometrically determine whether the tourism sector in Turkey causes Dutch disease, whether there exists a relationship between the tourism sector and the industrial sector, and how this situation affects Turkish economy.

2 Causes of Dutch Disease

As mentioned earlier, the starting point of the Dutch disease is the availability of new natural gas resources in the Netherlands. After the theoretical framework of the Dutch disease was developed by Corden and Neary (1982), causes of the Dutch disease which were formed by the influence of other factors attracted the attention of many researchers. After Buiter and Purvis (1983), many studies have examined the Dutch disease through the petroleum sector. For this reason, more studies have been done especially for Persian Gulf and OPEC member countries. In addition, the studies of Beck et al. (2007) for the Russian economy, Egert and Leonard (2008) for Kazakhstan, for Saudi Arabia Looney (1990), for Iranian economy Karimzade et al. (2009) and Esfahani and Pesaran (2009), Peter et al. (2014) for Australian natural resources, Papyrakis and Raveh (2014) for Canada, Wei Ge and Kinnucan (2016) for the Mongolian mining sector, and Mustapha and Masih (2016) for Nigeria are among the studies examining the Dutch disease.

However, over time, this subject was not limited to natural resources and energy factors. In some countries, it has been found that other advantageous products or factors cause Dutch disease. For example, in some countries, the export of agricultural products, which is advantageous in whole economy, caused the Dutch disease. More productive production of agricultural products in agricultural countries provided an export advantage to the country. This led to a significant amount of foreign exchange inflow to the country. The high amount of revenue created an impact on the spending and resource movement by influencing the employees in the other sectors (especially the industrial sector). All these factors led to Dutch disease. For example, in Colombia, the ←11 | 12→1910–1950 period of the bananas and the late 1970s, coffee exports have led to strong findings for the Dutch disease. Another sector that causes Dutch disease is the tourism sector, which is also the subject of this study. For the first time in literature, the concept of Dutch disease in the tourism sector has been developed by Copeland (1991). Following Copeland’s research, the studies of Balaguer and Cantavella-Jorda (2000) for Spain; Nowak and Sahli (2007) and Kenell (2008) for small island economies and Thailand, respectively; Kropp and Brussels (2009) for Greece; Holzner (2010) for 134 countries; Mieiro et al. (2012) for Macau; Gylfason and Zoega (2014) for Icelandic economy; Inchausti-Sintes (2015) for Spain; and Ghalia and Fidrmuc (2015) for 133 countries are the main studies investigating Dutch disease among them.

Another factor leading to Dutch disease is foreign aid. In this factor, it has been argued that the poor countries are caught by the Dutch disease through the help of international or other aid organizations. Two important studies in this area are the World Bank’s 2004 research for Ethiopia and Gupta and Yang (2005) for the African countries. In addition to the above, money transfer and direct foreign investments may cause Dutch disease. This issue has been the subject of research in more developing countries. Foreign currency inflowing to the country through money transfers creates significant effects on the country’s economy, such as foreign exchange inflow through natural resources. Some of the studies investigating Dutch disease in this issue are Beja (2010) for the top 20 remittance countries, Saab and Ayoub (2010) for Egypt, Bayangos (2012) for Jordan and Syria, Bayangos (2012) for the Philippines, and Makhlouf and Mughal (2013) for Pakistan. An example of a study on foreign direct investment is the study by Botta et al. (2015) for Colombia. In addition, there are studies in the empirical literature indicating that high interest rates may cause Dutch disease. Finally, the phenomenon of international migration is one of the factors that can cause Dutch disease, by creating inter-sectoral resource movement and spending effects in the countries. The study conducted by Beine et al. (2015) for Canada is an example of this factor.

3 Tourism Sector and Dutch Disease

The tourism sector plays a major role in reducing the current account deficit by providing significant amounts of foreign exchange inflows to the economy, especially in times of economic turbulences. Moreover, this sector has a great role in the fight against possible unemployment due to the labor-intensive nature of the tourism sector (Akın et al., 2012). Although there are some problems related to the use of environmental resources, tourism sector in developing countries is ←12 | 13→seen as an indispensable locomotive sector of economic growth. Tourism sector is considered as an early sector in terms of foreign exchange gains, efficient use of scarce resources, and increase in employment and diversity (Sinclair, 1998). Tourism is an important export factor in 83% of developing countries. At the same time, the tourism sector is the main export factor in one-third of this 83%. In the less developed 49 countries, the tourism sector is an important growth factor. The added value created by the tourism sector increased by 45% in these countries in the period of 1990–2000 and by approximately 20% in developing countries (WTO, 2002). Therefore, tourism sector is an important income source for the less developed and developing countries, especially in the short term.

According to the findings of some studies, the countries’ short run growth policy based on tourism has led to higher economic performance compared to other substitutable policies. However, some economists have disagreed with the results of these studies. For example, Copeland (1991) and Chao et al. (2006) argued that the growth in the tourism sector leads to a decrease in the accumulation of capital in the industry and manufacturing sector, although it reduces the consumption of non-tradable goods or improves the terms of trade. On the other hand, tourism sector is not a sector that provides or supports technological development. Solow (1956), Lucas (1988), Romer (1990), and Sachs and McArthur (2002) emphasized high technology as the most important factors that provide stable and sustainable growth in the long run. For this reason, tourism-oriented countries are more vulnerable and fragile to Dutch disease. The following four criticisms have been addressed to the growth advocates based on tourism sector, particularly in terms of sustainable development or growth (Inchausti-Sintes, 2015).

  I. Will a technology-free sector, such as tourism, guarantee economic growth in the long run?

 II. Will the capacity of the tourism sector be able to transform the exchange inflow into capital accumulation or guarantee its transformation?

III. Will the international competition in the tourism sector increase the efficiency of the sector?

IV. Will the return to scale of the tourism sector increase?

Details

Pages
264
Year
2019
ISBN (PDF)
9783631808320
ISBN (ePUB)
9783631808337
ISBN (MOBI)
9783631808344
ISBN (Softcover)
9783631805541
DOI
10.3726/b16410
Language
English
Publication date
2020 (February)
Keywords
Administration Business Management Economy Accounting Islamic Indexes Banking in Turkey
Published
Berlin, Bern, Bruxelles, New York, Oxford, Warszawa, Wien, 2019. 264 pp., 16 fig. b/w, 64 tables.

Biographical notes

Ragıp Pehlivanlı (Volume editor) Nurettin Bilici (Volume editor)

Ragıp Pehlivanlı is a graduate student at the Economics Department, Hacettepe University, Ankara (Turkey). Nurettin Bilici is Professor at the Law Faculty, Çankaya University, Ankara (Turkey).

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Title: Current Issues in Economy and Management