THE EFFECT OF ECONOMIC AND POLITICAL RISK ON UNEMPLOYMENT IN TURKEY

Abstract

The aim of this study is to investigate whether economic and political risk is affecting unemployment. Economic risk is the likelihood that an entrepreneur who wants to invest with a market profit expectation may face some unforeseen adversities in the future. Political risk is a kind of possibility that people, institutions, companies and entrepreneurs can be affected in the negative direction as a result of a number of faults that may occur in politics. Therefore, the relationship between economic and political risk can have positive or negative effects on unemployment. Economic and political risk used for its effects on unemployment data for the study Turkey's economy in 2005: 1 - 2015: 12-month period encompasses values and describes the time series analysis. the unemployment rate from the data, the consumer price index, the index of industrial production, export and import rates were taken from Turkey Statistical Institute data base. Other economic and political risk variables were derived from the PRS-ICRG institutional database. There is a negative moderate relation between unemployment rate and economic risk, industrial production index and import rates. There is a negative negative correlation between unemployment and political risk and exports. There is a weak positive relationship between unemployment rate and CPI. The relationship between economic risk and political risk is also a negative medium level. There is a negative weak correlation between economic risk and CPI, while there is a positive moderate correlation between economic risk and industrial production index, exports and imports. While there is a positive weak correlation between the political risk variable and the CPI change, the political risk seems to be a strong negative correlation for the industrial production index, export and import variables. There is also a long-run relationship between the variables used. In the analysis of causality, economic risk is the reason for unemployment at the level of 5% significance.