The sustainability of foreign trade deficit in energy becomes even more important for those countries that do not have sufficient energy resources and that have to import energy. As long as the countries' dependency on imported energy resources continues, the size of the foreign trade deficit in energy will have a direct impact on the sustainability of the current accounts deficit. Although there are numerous studies that examine empirically the countries' current accounts deficit and the sustainability of foreign trade deficit in literature through different unit root tests, no studies have been found that examine the sustainability of foreign trade deficit in energy. For this reason, the sustainability of foreign trade deficit in energy in Turkey between 1969-2013 was examined using the linear and non-linear unit root tests. The findings showed that Turkey's foreign trade deficit in energy is not sustainable. Having obtained such an outcome based on empirical findings is of paramount importance with respect to Turkey's long term growth and security projections.
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Having access to energy resources is of paramount importance for countries to increase/maintain their economic growth performance. The sustainability of foreign trade deficit in energy becomes even more important for those countries that do not have sufficient energy resources and that have to import energy. As long as the countries’ dependency on imported energy resources continues, the size of the foreign trade deficit in energy will have a direct impact on the sustainability of the current accounts deficit.
There are numerous studies in literature that examine the sustainability of countries’ current accounts deficit and foreign trade deficit. The unit root tests used in these studies can be classified under two main headings as linear and non-linear models. For example, while (AFM Kamrul Hassan 2013; Yoichi Matsubayshi 2005; László Konya 2009, Biswajit Nag & Jaydeep Mukherjee 2012) examined the sustainability of current accounts deficit through linear models, (Georgios E. Chortoreas, George Kapetanios & Merih Uctum 2004; Bonghan Kim 2005; Shyh-Wei 2010; Dimitris Chistopoulas & Miguel A.Leon-Ledesma 2010; Shyh-Wei Chen 2011a; Shyh-Wei Chen 2011b; Shyh-Wei Chen 2014; Vicente Donaso & Victor Martin 2014) examined through non-linear models.
It is of great importance to examine the sustainability of such deficit in countries where the foreign trade deficit in energy constitutes most of the current account deficit. Examining the sustainability of foreign trade deficit in energy can reveal an important indicator in terms of long term debt and foreign exchange crises as it will have a close impact on the sustainability of foreign deficit and can be an important determining factor with respect to the growth performances of countries. However, it was noticed in literature that such a study has not been carried out to date. Therefore, the basic purpose of this study is to close the gap in literature.
According to International Energy Agency (IEA) central scenario 2014, the global energy demand is set to grow by 37% by 2040. The emerging market economies will guide the energy markets during this period. According to the IEA’s World Energy Report published in 2012, the share of non-OECD countries in global energy demand which was 55% in 2010 will go up to 65% in 2035. Although the production of renewable energy resources grows fast in 2035, fossil fuels will continue to be the primary energy resources in global energy demand. The demand for oil, gas and coal will continue to increase as absolute value until 2035 and their share in energy mix will drop down to 75% from 81%.
Turkey comes second after China with respect to growth in energy demand. Turkey’s import dependency for energy is 72%. 98% of gas, 92% of oil and 30% of coal are imported. The demand for annual energy consumption for electricity grows around 7 to 8 percent in line with Turkey’s economic growth.