226 10 3494 https://omeka.ibu.edu.ba/files/original/d6741423f1218127f2c794890bf8ba6e.pdf 7b674d46c04af746d1152c662daba05d PDF Text Text 2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo Regulations and Accounting Applications in Insurance Sector of Turkey Rafet AKTAġ Dumlupinar University, Turkey rafetaktas@gmail.com Süleyman AÇIKALIN acikalinsuleyman@hotmail.com Abstract: Insurance is a contract with a premium payment based on the principle of paying claims when the risk, that is the reason of insurance for an interest, is realized. Trust is the base of insurance business. This sector especially in developing countries has a potential to raise new funds for economic development. In Turkey, 61 firms and 16,069 employees work in life, non-life, life/pension and pension branches of insurance sector in 2008. This sector is one of the developing areas in Turkey with 73 brokers and 13,250 agencies. Insurance agencies are working according to the Insurance Law and the regulations of the General Directorate of Insurance and Insurance Supervisory Board both of which organized under Turkish Treasury. These regulations are about establishment processes, insurance activities, the way of using funds collected from premiums, and adequacy of capital and liability compensations. Accounting activities are executed according to these regulations. In addition, Capital Markets Board (CMB) and Turkish Accounting Standards Board (TASB) describe standards and accounting applications have to obey these standards too. The name of this standard is Turkish Financial Reporting Standards (TFRS) 4 – Insurance Contracts that is arranged parallel to International Financial Reporting Standards (IFRS) 4 – Insurance Contracts. This study aims to describe the characteristics of insurance sector in Turkey and also to analyze some specific regulations and accounting applications. Introduction Insurance industry performs two important functions in economic life; one is micro and the other one is macro. Insurance companies create benefits in microeconomic sense by undertaking the risks faced by individuals as well as companies. Moreover, they contribute to the functioning of the financial markets by supplying the premiums they collected from their customers as funds to the financial system. Supplying the much needed long term funds for the real sector is critically important for the countries with limited capital accumulation. Insurance activities in Turkey are carried out according to Insurance Law No. 5684 and the regulations of the General Directorate of Insurance and Insurance Supervisory Board, both of which operate under the authority of the Undersecretariat of Treasury. These arrangements cover the areas of establishing insurance business and insurance processing activities as well as the use of collected funds, capital and liability coverage adequacy issues. Accounting practices, on the other hand, are conducted under the above mentioned arrangements as well as standards prepared by Capital Markets Board (CMB) and Turkish Accounting Standards Board (TASB). Turkish Financial Reporting Standard 4-Insurance Contracts prepared by TASB is the same as the International Financial Reporting Standard 4- Insurance Contracts prepared by the IASB. Some special arrangements and their accounting practices are going to be analyzed after providing a profile picture of the fast developing insurance sector in Turkey. Definition and Importance of the Insurance Sector Insurance is an organization which brings people, who is facing the same risk that is determined by a contract, together in order to pay for the expected damages (Pekiner, 1974, 17). Insurance is the act of guaranteeing that the payments for damages will be paid in case of the risk under contract is realized (Çaldağ, 1979, 9). The concept of insurance came to life when people who face the same threat of danger come together to pay for the damages with the conscious decision that it is not possible to completely eliminating physical dangers. Insurance companies try to eliminate negative consequences of the risk for the individuals with the help of other individuals who want to avoid the consequences on the basis of an assurance. Trust is the base of insurance 615 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo business. Insurance sector and its companies are important for the functioning of the financial markets. The insurance companies play an important role in financial markets by directing the funds they collected as premiums. Insurance Sector in Turkey Having enjoyed a spectacular growth consistently after the financial crisis in 2001, the insurance industry in Turkey experienced a slight decline at the last quarter of the 2008 and concluded the year with a growth rate below inflation as a result of the global financial crisis (Annual Report 2008, 3). There are total of 61 insurance and pension companies consisting of 36 non-life, 24 life/pension and 1 reinsuring companies in Turkey in 2008 (Annual Report 2008, 25). There are 13,250 agencies excluding bank insurance, 73 brokers and 901 loss adjusters (natural entity) in insurance and private pension sector as of December 31 st, 2008 in Turkey. It is estimated that over 50 thousands of people are employed in the sector including agencies, brokers and loss adjusters with 16,069 employees in insurance companies (Annual Report 2008, 26). When the year 2008 is evaluated by the end of year figures, we could see that insurance companies concluded 52.4 million contracts and 37.5 million policies during the year. It means that the number of contract and policies increased by 15% in 2008. The total amount of assets of the industry also rose by 19% to 27.9 billion TL compared to 2007 (Annual Report 2008, 3). Turkish insurance sector took 36th place within 88 countries with a share of 0.21% in global premium production. According to the ratio of premium volume to GDP and premium volume per capita, Turkish insurance market has been ranked 76th and 65th, respectively. Turkey has a rank of 34 over total of 35 European Countries in premium volume per capita (Annual Report 2008, 22). Legal Regulatory Authorities in Insurance Sector in Turkey The insurance companies must operate under the guidelines of TFRS, Insurance Law, and the Turkish Commerce Law. At the same time, insurance activities take place inside the framework set by Insurance Supervisory Board and General Directorate of Insurance both of which operate within the Undersecretariat of Treasury. Regulations by the Undersecretariat of Treasury The responsibility of regulating and supervising the insurance sector is given to the Undersecretariat of Treasury with Insurance Law. There are two units operating within the Treasury about the insurance activities in Turkey. These are the Insurance Supervisory Board and the General Directorate of Insurance . Insurance Supervisory Board The Insurance Supervisory Board was established in 1963 with Law No. 7397 to supervise all activities of insurance companies. General Directorate of Insurance Insurance companies must obey the rules by General Directorate of Insurance . This department is established by the law establishing the Undersecretariat of Treasury which is dated December 20 th, 1994 and numbered 4059. Insurance Law The purpose of the Insurance Law No. 5684 is to develop the insurance sector in general, to protect rights and benefits of insured entities and to make sure that the sector could work efficiently in a safe and stable environment. This law also organizes the start up procedures in the sector and sets the main rules and methods of operations in the industry. 616 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo The Turkish Commerce Law Regulations The fifth chapter of the Turkish Commerce Law is devoted to the topic of insurance. The necessary definitions such as insurance contracts and insurance policy are given and types of insurance are explained in this book. Turkish Accounting Standards Board (TASB) and TFRS 4 Insurance Contracts Standard Turkish Accounting Standards Board is a public entity established with law in order to perform duties defined by the Capital Markets Law and has financial and administrative independency. TASB published International Accounting/Financial Reporting Standards as the Turkish Accounting/Financial Reporting Standards on the Official Gazette on several dates and Turkish Accounting/Financial Reporting Standards which are going to guide the Turkish accounting practices became in full harmony with the International Accounting/Financial Reporting Standards. One of these standards is the TFRS-4 Insurance Contracts Standard, which is published on March 25 th, 2006 No. 26119 issue of the Official Gazette for the first time and some changes are officially made on July 15 th, 2007 No. 26583 issue of the Official Gazette. Even though these standards set the general framework, they do not include detailed explanations for insurance accounting practices. However, it is a known fact that the International Accounting Standards Board (IASB) is still working on the issues of ―recording‖ and ―valuation‖ about insurance contract. Various arrangements are made regarding financial reporting activities of insurance companies on the directive about TFRS-4. The main objective of TFRS-4 is to determine the principles of financial reporting of the insurance companies. TFRS-4 includes all activities of insurance companies including reinsurance (Berk, 2005, 25). Accounting Practices by Insurance Companies Accounting practices of insurance companies are quite different from companies in other sectors. The nonphysical nature of the insurance business differentiates the insurance company from companies in manufacturing and in commerce. There are other differences for the insurance company in other areas such as capital structure, resource allocation, and working style. Even though the insurance companies locate inside the financial services sector, the structure of assets and liabilities are quite different from other financial companies (AktaĢ, 2005, 124). The differences of insurance companies show themselves also on insurance accounting. These are (Candar, 2001; Uyanık, 2001, 510; BaĢpınar, 2005, 6); a) The amount of receivables and payables of insurance companies show uncertainties in many aspects. The main source of this uncertainty arises from the fact it is not known whether the risk under insurance is realized and how big the compensation is going to be if it is realized. b) In case of insurance companies, it is not possible to determine periodic profit or loss with certainty. Because the price of every service provided is based on certain possibility calculations. These calculations generally include an average value according to the law of big numbers. When the damage is realized above the expected rate, there will be a loss for the insurance company. Otherwise, there will be a profit. c) A significant portion of premiums collected by insurance companies is paid back to the clients as compensation payments. However, it is not possible to determine the amount, the timing or the identity of the client with certainty. d) The allowances for uncertainties are allocated from the premiums collected from clients rather than the profit as in the case of other businesses. The financial tables carry some margin or errors since the amount of these allowances depend on possibility calculations. e) The differences between life insurance and general insurance create some accounting problems in this sector. The above mentioned policies provide coverage for different periods with their different premium structures. The different laws and accounting practices, such as these different policies can not be provided by the same company, led to developments of these two branches completely separately. f) The probability of determining the revenues and expenses with certainty is low since financial flows of the insurance companies goes beyond a single period. However, it is assumed that the revenues collected and compensations made during the same calendar year are assumed to belong to the same calculation period. Profit and loss calculations in case of commercial and industrial companies, on the other hand, generally belong to the same calculation period. Moreover since the insurance sector functions on the principle of trust and the governments feel the need for protecting the rights and benefits of clients, the sector faced very important legal restrictions and regulations in many 617 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo countries. Establishing technical provisions, giving a bigger weight to the liquid assets in total assets, requirement of establishing funds, extra capital requirements to make sure they have the compensation payment adequacy are some examples of the regulations faced by the insurance industry. Technical Provisions Technical insurance provision is defined as the funds separated by the insurance companies established as corporations by the Insurance Law to cover the responsibilities of policies not expiring by the last day of the period and allowed to subtract from the revenues as an expense according to the Corporate Taxation Law (Arslanhan, 1996, 12). Insurance technical provisions is the amount separated by the insurance companies because of responsibilities they carry due risks covered by the policies they prepared. The most important function of these provisions is guaranteeing the compensation payment must be made by the insurance company when the insured risk is occurred. Moreover, the provisions show the degree of risk the company faces for the financial information users. Insurance Law lists the technical insurance provisions as: - unearned premium provisions - unexpired provisions - equalization provisions - mathematical provisions - outstanding claims provisions - promotion and discount provisions Technical provisions are located on the balance sheet as a liability. In order to understand whether the technical provisions adequately cover the risk they face, liability adequacy test is performed. The liability adequacy test for life and non-life insurance companies could be summarized as the following table (Sarıaslan, 2008, 20-21). A. Future Cash Flows Expected losses Related expenses of losses Related management expenses B. Insurance Liabilities Unearned premium provisions Premium production expense Related non-physical assets (+) (+) (+) (+) (-) (-) Table 1. Non Life Insurance Company A. Future Cash Flows Expected losses Related expenses of (+) Related management expenses Embedded options and (+) B. Insurance Liabilities Actuarial mathematical provisions (+) Unearned premium provisions Premium production expense Related non-physical assets Table 2. Life Insurance Company 618 (+) losses (+) warranty (+) (-) (-) �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo TFRS 4 finds such a test outlined above as sufficient for the insurance companies (Sarıaslan, 2008, 21). Liability adequacy test in Turkey is formulated by the regulations of the Turkish Treasury as the following: Years I) Allocated Provisions A. Accrued B. Not reported C. Expense share II) Realized D. Accrued E. Not reported F. Expense share 2005 2006 2007 2008 2009 Total 2010 150 40 10 130 30 8 120 20 12 200 50 15 220 70 20 820 210 65 210 120 50 15 140 20 13 130 25 10 190 45 10 310 80 20 890 220 68 III) Adequacy ratio Accrued (A/D) * 100 Not reported (B/E) * 100 Expense share (C/F) * 100 92,1 95,4 95,5 IV) Difference in adequacy Ratio (The legal adequacy ratio is 95%) 1.Accrued 95-92,1 = 2,9 - 2.Not reported 3.Expense share * (210+6,09*) = 216,09 - 210 x %2,9 Standards allow discounting the general insurance provisions but this practice is not required at this stage. At the same time, standards do not ban the use of rate of return of insurance assets as the discount rate. Up until the completion of second stage of establishing insurance standards by IASB, premium production expenses could be deferred (AktaĢ, 2005, 124-125). Conclusion Insurance industry performs two important functions, one micro and the other one is macro, in economic life. The insurance sector in Turkey operating in the branches of non-life, life, life/pension, and pension with 61 companies and 16,069 employees by 2008 is fast growing sector. Insurance activities in Turkey are carried out according to Insurance Law and the regulations of the General Directorate of Insurance Business and Insurance Supervisory Board, both of which operate under the authority of the Undersecretariat of Treasury. Turkish Financial Reporting Standard 4-Insurance Contracts prepared by TASB is the same as the International Financial Reporting Standard 4- Insurance Contracts by the IASB. Regulations prepared by the legal authorities in Turkey satisfy the minimum requirements set by the TFRS-4. There are going to be serious changes in insurance accounting practices in Turkey when the second stage of Insurance Contracts Standards is completed. References AktaĢ, R. (2005). Sigorta ĠĢletmelerinde Gerçeğe Uygun Değer YaklaĢımının Kullanılması ve Değerlendirilmesi, Gazi University Unpublished Phd Thesis, Ankara. Annual Report about Insurance and Private Pension Activities in Turkey, 2008 Arslanhan, N. (1996). Sigorta Teknik Ġhtiyatları, Vergi Sorunları Dergisi, Eylül. BaĢpınar, A. (2005) Finansal Analiz Tekniklerinin Sigorta ġirketi Mali Tablolarına Uygulanması, Maliye Dergisi, Sayı:149, Mayıs-Aralık. 619 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo Berk, N. (2005). AB Sigortacılığı'nda Solvency II Düzenlemeleri ve Türk Sigortacılığı'nın Harmonizasyonu, Türkiye Sigorta ve Reasürans ġirketler Birliği Yayını, Bilim ve DanıĢma Kurulu Onaylı Eserler. Candar, S. (2001). Sigorta Muhasebesi ve Mali Tablolarının Diğer Sektörlerden FarklılaĢması ve Analizi, Ankara. Çaldağ, Y. (1979). Sigorta ĠĢletmeleri ve Muhasebesinin Ġncelenmesi, AĠTĠA Yayınları, Ankara. International Financial Reporting Standard 4- Insurance Contract Pekiner, K. (1974). Sigorta ĠĢletmeciliği Prensipleri-Hesap Bünyesi, Ġstanbul. Sarıaslan, M. (2008). Devam Eden Riskler KarĢılığının TFRS 4‘deki Düzenlemelerle KarĢılaĢtırılması, Sigorta AraĢtırmaları Dergisi, Sayı:4. Turkish Financial Reporting Standard 4- Insurance Contract Uyanık, A. (2001). Denetim, Muhasebe ve Vergilendirme -Sigorta Sektörü Uygulamalı-, Beta Basım Yayım Dağıtım, Ġstanbul. 620 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 295 Title A name given to the resource Regulations and Accounting Applications in Insurance Sector of Turkey Author Author AKTAŞ, Rafet AÇIKALIN, Süleyman Abstract A summary of the resource. Insurance is a contract with a premium payment based on the principle of paying claims when the risk, that is the reason of insurance for an interest, is realized. Trust is the base of insurance business. This sector especially in developing countries has a potential to raise new funds for economic development. In Turkey, 61 firms and 16,069 employees work in life, non-life, life/pension and pension branches of insurance sector in 2008. This sector is one of the developing areas in Turkey with 73 brokers and 13,250 agencies. Insurance agencies are working according to the Insurance Law and the regulations of the General Directorate of Insurance and Insurance Supervisory Board both of which organized under Turkish Treasury. These regulations are about establishment processes, insurance activities, the way of using funds collected from premiums, and adequacy of capital and liability compensations. Accounting activities are executed according to these regulations. In addition, Capital Markets Board (CMB) and Turkish Accounting Standards Board (TASB) describe standards and accounting applications have to obey these standards too. The name of this standard is Turkish Financial Reporting Standards (TFRS) 4 – Insurance Contracts that is arranged parallel to International Financial Reporting Standards (IFRS) 4 – Insurance Contracts. This study aims to describe the characteristics of insurance sector in Turkey and also to analyze some specific regulations and accounting applications. Date A point or period of time associated with an event in the lifecycle of the resource 2010-06 Keywords Keywords. Conference or Workshop Item PeerReviewed HB Economic Theory https://omeka.ibu.edu.ba/files/original/5111ee7c27f242f750b5834f514b6cff.pdf dc4607aa231620986861114983c6afe9 PDF Text Text ���0 20 40 60 80 100 �  �2009 2010 2011 2012 ��    ��������� https://omeka.ibu.edu.ba/files/original/9b3397a48173adf439e872c51f4255d0.docx bb8d31bb491a83be104c9401904e0736 Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 3088 Title A name given to the resource Reguliranje tržišta ogrjevnog drveta po evropskim standardima sa osvrtom na reguliranje tržišta u Unsko -sanskom kantonu Author Author VELADŽIĆ, Mirsad ĆEHAJIĆ, Alma VELADŽIĆ, Fatima Abstract A summary of the resource. Drvna masa, kao proizvod, jeste najznačajniji domaći proizvod za grijanje na području Unsko-sanskog kantona (USK). Preduzeće koje gospodari drvnom sirovinom u USK učestvuje u razvoju nacionalne ekonomije, čime pomaže razvoju zajednica. U radu je predstavljen koncept ovladavanja neregularnog tržišta drvnom masom na području USK-a, europski standardi i način regulacije europskog tržišta drvetom i proizvodima od drveta te usklađivanje bosansko-hercegovačkih standarda sa europskim. U konceptu se vidi obim i izgubljeni nivo sredstava koja bi mogla biti iskorištena za nova zapošljavanja i supstituciju raznih energenata (nafte, lož ulja...). U USK-u postoje razvijeni kapaciteti u proizvodnji peleta, što predstavlja dobru osnovu u primjeni istog u domaćinstvima i uvođenju u privredne subjekte, što otvara potrebu novih ulaganja u strukturu drvnog sektora. Publisher An entity responsible for making the resource available Pravni fakultet Univerziteta u Bihaću i Centar za društvena istraživanja Internacionalnog Burč univerziteta Date A point or period of time associated with an event in the lifecycle of the resource 2014 Keywords Keywords. Article PeerReviewed K Law (General) https://omeka.ibu.edu.ba/files/original/752c8f814db27b34f1861c7890b3aedf.pdf 3306ce1e3d72374c638706fa27097e78 PDF Text Text 1. International Symposium on Sustainable Development, June 9-10 2009, Sarajevo Relation between Real Effective Exchange Rate And IMKB -100 Index (Istanbul Stock Exchange) Yusuf TOPAL Faculty of Economic and Administrative Sciences Afyon Kocatepe University, Türkiye ytopal75@hotmail.com Ali AKGÜN Faculty of Economic and Administrative Sciences Selçuk University, Türkiye akgunali@hotmail.com Abstract: Stock exchange is a market where long-term investment instruments are purchased and sold such as share certificates, bonds etc. Stock exchange market is divided into two; developed and emerging stock markets. Developed stock markets are financial markets with a great depth which display activity in industrialized countries and constitute international financial market. Emerging stock markets are the stock exchange markets with a shallow depth which display activity in developing countries. Istanbul Stock Exchange has a rather important place among these stock exchange markets. Emergence of the new capital markets, increase in financial liberalization and expansion of flexible exchange rate regimes caused an increase in the examination of exchange rate and stock exchange market. Developing economies that gradually abolished control on exchange rate, paved the way for international investments and portfolio diversification. Today, it’s seen that savers basically directs the funds in their hands to three instruments for the purpose of investment. They are interest, foreign exchange and stock exchange market. Investors who are the savers attempts to increase their returns in the maximum rate with the portfolios they constituted from among these three instruments. When the literature is examined, it’s seen that there are many studies which examined relation between interest and stock exchange market from among these financial instruments. Result from these studies is that there is a negative, that is, an inverse relation between stock exchange market indices and interest rates. And purpose of this study is to see whether or not there is any long-term relation between real efefctive exchange rate and IMKB-100 index (Istanbul Stock Exchange), if any, to determine the direction of this relation. In this study, three-month data of real effective exchange rate (REDK) and IMKB-100 index for 1990-2005 periods have been used. Starting point of study is the year 1990. Its reason is to test presence of long term relation between real effective exchange rate (REDK) and IMKB-100 index by using long-term data that we could reach. Data sets used in study are the values of indices and were received from Central Bank Electronic Data Distribution, Republic of Turkey (EVDS). Long-term relation was examined and empirical findings were proved by using Johansen-Juselius co-integration test (JJ). As a result of examination above, it was ensued that ther was a long-term positive relation between real effective exchange rate (REDK) and IMKB-100 index (Istanbul Stock Exchange). Keywords: Exchange rate, ISE Introduction Stock Exchange is a market where long term investments like stocks, bonds are bought and sold. Thanks to stock exchange the people’s savings are attracted to firms as capitals. In this way, capital is expanded to the base of the society. The firms which have a achieved a certain level of size and which are registered to stock exchange meet their long term fund needs by exporting shares and bonds which have better conditions than bank loans. The diffusion of shares to the base in particular realized through stock exchange. As for debt capital, bonds more alluring than long term bank loans both in terms of interest rates and of payment and of due date. In this way, by means of stock exchange both the volume of capital markets enlarges and the long term fund request from banks relieves. In addition, stock exchange has the following important functions like providing liquidity, being an economic indicator, diffusing the property to the base, and creating source for funds. Stock exchanges are divided into two as developed and emerging stock markets. Developed stock exchanges are financial markets of great depth which are active in developed countries and which create international financial market. Emerging stock exchanges are shallow markets which display activity in developing countries. One of the most important characteristic features of these stock markets is that they are 299 �1. International Symposium on Sustainable Development, June 9-10 2009, Sarajevo easily affected from many parameters and thus having unstable yields for investors. Sometimes, these stocks can perform very well, and sometimes they can cause investors loose a fortune. Istanbul Stock Exchange holds an important place among these kind of stock exchanges. Stock exchanges function as the barometer of economic, social and politic life in all the countries of the world. Changes, developments and problems in economic, social and political life are immediately reflected in stock exchange. The changes in national economic lives and indicators and international economic data have important direct effects on stock exchange and even causes great fluctuations. International economic data affect and direct emerging stock exchanges at least as much as changes in national economies. Real effective foreign exchange currency became common in 1970s with the introduction of floating exchange rate. As floating exchange rates became more common, the multisided changes in rate of exchange have become more important in terms of trade competitiveness. The change in the value of a currency with regard to other certain currencies is the indicator of both the change in foreign currency market and in competitive power of trade. This is the nominal effective rate. However, as the inflation rate of the countries experience is different, the nominal effective rate is inadequate in indicating trade competition power. If the value currency of the country loose is so that it can compensate for the difference between the inflation rate in a given country and the inflation rate, it means that real currency remains the same. In other words, there is no change in trade competition power, which stems from currency change. The real increase or decrease in effective currencies is used as indicators of change in foreign exchange market and competitive power. To obtain real value from nominal value, the foreign exchange rate is regulated in accordance with the difference between the inflation rate of a given country and the world. In the first part of this study, the literature review on the studies examining the relation between foreign exchange rates and foreign exchange is provided. The second part of the study includes three main headings; methodology, purpose, method and findings. Finally, the conclusion is given. Literature Review With the emergence of new capital markets, and with the increase in financial liberation and flexible currency regime, the number studies into the nature of the relation between foreign exchange rate and stock exchange increased. The developing economies that are gradually lifting the control over foreign exchange have opened the way to international investments and portfolio diversity. Also, the countries that adopted a more flexible currency regime have increased the floating in foreign exchange markets. Classical theory of economy suggests that there is a relation between stock and foreign exchange. For example; according to free currency, it is a well known fact that international competition and trade balances are affected from money movements. Besides, this situation has an important effect on the countries real outputs which determine the current and future cash flow of the firms and share prices (Dornbush and Fisher, 1980). Movements in share prices can also affect foreign exchange rate. According to monetarist model, equity capital can affect money demand and foreign exchange rate movements (Gavin,1989). In the previous studies which mostly examined the foreign exchange and shares markets in the US have found various results. For example, Aggarwal found out that the revaluation in US dollar affected share prices positively. On the contrary, Soenen and Hennigar found a negative relation during the years 1980-1986 they took into consideration. Roll who used daily data between 1988 and 1991 found a positive relation between the two markets. On the other hand, Chow et al. who made use of monthly data in the period between 1977 and 1989 didn’t find any relation between the two markets. Apart from these studies, Bahmani-Oskooee and Sohrabian were the first to use the congregation test in their examination of the relation between the two markets. They made use of the monthly data between 1973 and 1988 and found out that there was a dual relation between the two effective foreign exchange rate and S&P 500 index in the short term. Ajayi and Mougoue who used the data of eight industrialized countries of the period between 1985 and 1991 found significant relations. To make it clear, they found that there was a negative relation in short term and a positive relation in long term and that shocks in foreign exchange rates have a negative effect on share markets. Abdalla and Murinde who studied the relation between foreign exchange rate and share market by making use of data between 1985 and 1994 four Asian countries found that there wasn’t any relation in Pakistan and Korea and that there was a relation between these two markets in India and Philippines but these relations were not in the same direction. Muhammed and Rasheed who studied four southern Asian countries by using monthly data between 1994 and 2000 found no relation in Pakistan and India, whether in short or in long terms. In a study, Phylaktis and Ravazzolo (2000) who examined the performances between foreign exchange rate and share prices between 1980 and 1998 in Pacific region countries found a positive relation between the two markets. Amare and Mohsin (2000) studied the relation between foreign exchange rate and share markets in nine Asian countries. In their study, they studied the monthly data between January, 1980 and June, 1998 by making use of co-integration technique. As result of their study, they found a long term relation only in Singapore and Philippines. Murinde and Poshakwale found a relation between share prices and exchange rates 300 �1. International Symposium on Sustainable Development, June 9-10 2009, Sarajevo before Euro and after Euro period in Hungary, Czech Republic and Poland. The result of this study indicated that before Euro there was a one sided relation only in Hungary and that there was s strong dual relation in Czech Republic and Poland. Gupta, Chevaliler and Sayekt who studied the relation between foreign exchange rate, share market and interest rates in Jakarta economy found a weak one sided relation between foreign exchange rate and share prices. Kim K. found a negative relation between S&P 500 index and real foreign exchange rate. Stavarek studied the relation between foreign exchange rate and stock exchange rate in four older European Union members and in four new members and in the US. According to the data obtained in this study, there was a stronger relation between foreign exchange rate and share prices in older EU members and in the US -whose capital markets are developed- compared to the new members of EU. Besides, this study proved that mostly there is a direct and one-sided relation between these two markets. Finally, in similar studies, it was concluded that real effective foreign exchange rate is more suitable than nominal effective foreign exchange rate. Methodology Aim Today, saving accounts owners direct the funds they have to three main instruments for investments purposes. These are interest, foreign exchange and stock exchange. The investors try to increase their income to maximum by means of portfolio they compose of these three main instruments of investment. Funds can spare more space to one of these three instruments in accordance with circumstances in global and national economy. When the literature was reviewed, it is seen that there are many studies examining the relation between interest and stock exchange. The common result of these studies is that there is a negative- that is a reverse- relation between stock exchange rate and foreign exchange rate. The main aim of this study is to determine whether there is a long term relation between real effective foreign exchange rate and IMKB-100 index and if there exists what is the direction of this relation. Data In this study, three months data of real effective foreign exchange rate (REFER) and IMKB-100 index between 1990-2005. The study started in 1990. The reason to start this study so early is to test the existence of a long term relation between REFER and IMKB 100 index by making use of the oldest data available. The data set was the index values taken from the Electronic Data Distribution System of Turkish Central Bank. The econometric analysis of the study was performed by using EViews 4.1 software. Method After the article published by Engel and Granger, especially in the 1990, there happened important developments in time literature serial. Accordingly, many macroeconomic time serials have a trend and this situation can lead to fake regression results (artificially increased and invalid test statistics) (Charemza ve Deadman, 1997). There were many methods suggested as a solution for this. It was suggested that stochastic trend can be eliminated by taking the difference of the variables but this method can lead to the loss of valuable long term information. The solution came with the co-integration analysis suggested by Engel and Granger. According to this, even if the variables include trends, the error term which expresses the deviations in long term is fixed-that is to say its variance and mean doesn’t change in time, there is a real economic causality relation between variables. In this case, the variables in the regression are called co-integrated. Co-integration analysis has become an affective method which is used in the testing of theory of economy and in the prevention of dummy regression results in the regression and modeling of the economic variables. Thanks to co-integration analysis which was introduced to the literature in 1980s time serial econometric and in the testing of economy theory. The benefits of co-integration concept to the literature and the areas of application can be examined under the following items; a) The removing of dummy regression results in regression analysis,1 b) It is used as a new and effective modeling which provides the testing of long and short term economic variables together and econometric assessment c) It is regarded as a pre-test before econometric assessment phase and d) Its making long terms economic relations that is the testing of economy theory 1 The existence of the koentegre relationship between variables at the same time also guarantees the existence of causality relationships(Engel and Granger, 1987). Researches indicate that the majority of the time series of macroeconomic contains trends (see Nelson and Plosser, 1982). Therefore, researchers who have applied researches should take this into consideration. 301 �1. International Symposium on Sustainable Development, June 9-10 2009, Sarajevo In this study, firstly the stable levels of the variables are to be determined (Dickey ve Fuller, 1979). If the mean and the variance of a time serial doesn’t change as time goes by and the common variance between two terms is dependent on the distance between two terms but not on the terms it was calculated then it is called stable (Gujarati 1999: 713). If a Y1 time serial whose mean, variance and common variance are the same as the ones in Equality 1 is stable, these three values will be the same whenever they are measured in a given time period. E (Y1 ) = µ var(Y1 ) = E (Y1 − µ ) 2 = σ 2 (1) y1 = E [(Y1 − µ )(Yl +k − µ )] Putting the serials into equalities without meeting stability conditions, makes some relations which are not existent in reality seem to exist (Granger and Newbold, 1979: 111-120). Accordingly, the stability tests of the serials used in this study were performed by making use of “Enlarged Dickey-Fuller” test. To implement this test, the estimations were made according to regression number (2) for each serial used in the study. k ∆Y 1= a + yTrend + pYt −l + ∑ δ 1 ∆Yt −i + ε 1 (2) t −l ∆Y = (Y − Y ) t t t − l . The fixed term α shows Trend time or In equalities, ∆ shows circular difference and ε general tendency variable and shows the leftover of the model. EDF test’s achievement of robust results depends on estimated regression equality’s being freed from auto regression problem. The removing of auto regression problem in this equality makes the first circle difference of the dependent variable “k” necessary to be included into the model as an explanatory variable for lag in term. The lag length which is expressed as “k” in the equality was determined by Akaike by using AIC (Akaike Information Criterion) method. EDF tests whether p=0 or not in the regression estimated above. If H0 hypothesis (p=0) is rejected, it is determined that Y variable is stable at its original level, but if it is accepted it means that Y variable is not stable. Till one can find the stability of a time serial which is not stable at its original level, these procedures are repeated for the first, second and if necessary for the third term difference. By comparing the EDF-t statistics of the equalities whose lag length are determined with McKinnon (1990) critical values, it is determined whether the variable is stable at the level it was tested. In this study, to determine the long term effect of real effective foreign exchange index on IMKB 100 index, the co-integration test developed by Johansen-Juselius (1992) was used. Johansen-Juselius (JJ) cointegration technique is composed of the unstable serial differences and the assessment of VAR (Vector Auto Regression) which includes their levels. Suppose that there are two series which are not stable at their levels ( X and Y). In this case, on the condition that there is a vector including Z, X, Y series, the VAR model created for JJ assessment will be like the following equality (3); ∆Zt = Γi∆Zt-1 + …+ Γk-1∆Zt-k+1 + Π∆Zt-k + εt (3) Here, Γi (i = l, 2, k-1) Zt expresses the parameter matrix of the variables which express the lag of the vector’s first difference; and II expresses the parameter matrix of the levels of the variables, and ε expresses the leftover values of VAR model. As ΠZ matrix include direct combinations pertaining to the levels of the variables in Z vector, it possible to get information about the long term features of the model by examining this matrix. In the determination of the lag term number in the VAR model “Akaike Information Criterion” was used. The Cointegration relations between the variables which are examined to have long term relations were assessed with the help of two test statistics. One of them was “Trace”, the other was "Maximum Eigenvalue Test" statistics. The Trace test examines the rank of the Π matrix (the coefficient matrix of vector which include the level values of the variables) and tests the hypothesis H0 whether the rank of the matrix is equal or smaller than r. The maximum eigenvlaue test statistics test the H0 hypothesis which expresses that co-integrate vector is r against its alternative hypothesis which states that the vector is r+1. The critical values of both these tests are given by Johansen and Juselius. If II the rank of II matrix is zero, it is concluded that the variables composing Z matrix are not co-integrated to each other, that is, they do not cooperate in the long run. If the rank of the same matrix is at least “one”, it is concluded that the two variables in Z matrix cooperate in the long run. The long term relation between two variables which have one co-integration relation will be like in the following equality (4). The X and Y in the equality shows dependent and expressive variables, β shows the parameters of the variables and ε shows the faulty term. 302 �1. International Symposium on Sustainable Development, June 9-10 2009, Sarajevo β1 X 1 + β 2Y1 + ε 1 = 0 (4) Findings As Co-integration equalities require the using of unstable series and the stable variables of error correction equalities, each data series is firstly examined for the possible level of difference stability. The unit root test results are given in Table 1 and Table 2. Table 1 and Table 2 give us the EDF results of IMKB 100 and REFEC (real effective foreign exchange currency). When the critical importance of providing stagnancy is considered, a variable can only be decided to be stagnant if it passes EDF test (Darrat, 2002). As it can be seen in Table 1 and Table 2, EDF test statistics absolute values being greater that absolute values of significance level 1%, 5% and 10% shows that the series are stagnant at 1st level. In technical terms, both IMKB 10 index and REFEC are (1). As the twp series are stagnant at 1st level, to investigate the long term relation Johansen –Julieus co-integration test can be implemented. Table 1: EDF unit root test (ĐMKB) t-values -5,106309 EDF Test Values %1 -2,602794 Critical Values %5 -1,946161 %10 -1,613398 Table 2: EDF unit root tests (REDK) t-values -8,253956 EDF Test Values %1 -2,602794 Critical Values %5 -1,946161 %10 -1,613398 Prob. 0,0000 Prob. 0,0000 As the variables are stagnant at the same level, we can do co-integration test by using Johansen-Juselius methodology. As JJ co-integration test is very sensitive to the choosing of lag length, the first phase in this test is to find an appropriate lag structure. In order to find appropriate lag structure, a VAR model would be useful. If the lag time is very short the model will be deficient and if the lag time is too long then the slackness level will be decreased. For both Schwartz and Akaike information criterion the lag time for the examined VAR model is ( VAR=1). Lag 0 1 2 3 4 5 Table 3: VAR Analysis AIC 28.54575 25.11201* 25.14519 25.15760 25.19282 25.20785 6 25.16170 *: The Lag number according to the characters chosen Lag: Lag number AIC: Akaike Information Criterion SC 28.61680 25.32516* 25.50043 25.65495 25.83227 25.98940 26.08535 SC: Schwarz Information Criteria As it can be seen in Table3, Schwarz and Akaike information criteria 1 lag was suggested. For the last time, Table 4 and Table 5 indicate that there is at least one long term relation between Trace Test and Max Eigenvalue, and real effective foreign Exchange value and IMKB 100 index. At this point, Trace Test value and Max Eigenvalue test being higher than critical value of 5% significance level reveal that there is a long term relation between REFEC and IMKB 100 index. 303 �1. International Symposium on Sustainable Development, June 9-10 2009, Sarajevo None* At most 1 Table 4: Trace Test Trace Critical Test value (0,05) 21,54963 15,49471 3,687484 3,841466 None* At most 1 Table 5: Maximum Eigenvalue Test Max. Critical Eigenvalue Test value (0,05) 17,86215 14,26460 3,687484 3,841466 Prob. 0,0054 0,0548 Prob. 0,0129 0,0548 Table 6: Normal Co-integration Coefficients REFEC IMKB 1,000000 -0,001686 Standard Deviation (0,00029) From the values in Table 6, it can be concluded that there is a positive long term relation between REFEC and IMKB-100 index. Conclusion In this study we have examined whether there is long term relation between real effective foreign exchange currency and IMKB-100 index and its way. While examining the existence of long term relation between a real effective foreign exchange and IMKB-100 index, co-integration method was used. In the creation of our data set, the electronic data distribution system of Turkish Central Bank was used. Our data set covers the period between 1990: 01 and 2005: 04. The analysis was carried out by using three-month length data sets. “Johansen-Juselius Test” was used as Cointegration method. The stagnancy of the variables was first tested by using EDF unit root tests and it was decided that the series are stagnant and that it was decided that “Johansen-Juselius Co-integration Test” (JJ) could be performed. As the Johansen-Juesluis Co-integration Test is sensitive to lag length, VAR analysis was used to find appropriate length and it was seen that the lag length is (1) according to both Akaike and Schwartz. Finally, the trace test and Maximum Eigenvalue tests were performed, and it was concluded that there is a long term relation between the two variables just as in other studies in the literature. It was seen that this is a positive relation, in other words, the increases in real effective foreign exchange currency or any decrease in real effective foreign exchange currency lead to a decrease in IMKB-100 index. References Abdalla, I. S. A., Murinde, V. (1997) “Exchange Rate and Stock Price Interactions in Emerging Financial Markets: Evidence on India, Korea, Pakistan, and Philippines”, Applied Financial Economics, 7, 25-35. Aggarwal, R. 1981, "Exchange Rates and Stock Prices: A Study of the US Capital Markets under Floating Exchange Rates", Akron Business and Economic Review,s. 7-12. Ajayi, R.A., Mougoue, M. (1996) “On the Dynamic Relation between Stock Prices and Exchange Rates”, Journal of Financial Research, 19, 193-207. Akaike, H. (1969). “Fitting Auto Regressions for Predictions”. Annals of the Institute Statistical Mathematics (21): 243-247. Amare, T., and MOHSĐN M., (2000) “Stock Prices and Exchange Rates in leading Asian Economies: Short Run Versus Long Run Dynamics.” Singapore Economic Review 45: 2, 165-181. Bahmani-Oskooee, M., Sohrabian, A. (1992) “Stock Prices and the Effective Exchange Rate of the Dollar”, Applied Economics, 24, 459-64. Charemza, W.W. ve D. Deadman (1997) New Directions in Econometric Practice, 2. Baskı, Edward Elgar Yayınevi, Đngiltere. Chow, E.H., W.Y. Lee and M.S. Solt, 1997, "The Exchange Rate Risk Exposure of Asset Returns", Journal of Business, 70, 105-123. 304 �1. International Symposium on Sustainable Development, June 9-10 2009, Sarajevo Darrat, A.F. (2002), Budget Balance Through Spending Cuts or Tax Adjustments? Contemporary Economic Policy, V.20, N.3, 221-233. Dickey, D. A. and W. A. Fuller (1979). “Distribution of the Estimators for Autoregressive Time Series with a Unit Root”. Journal of the American Statistical Association (74): 427-431. Dickey, D. A. and W. A. Fuller (1981). “Likelihood Ratio Statistics and Autoregressive Time Series with a Unit Root”. Econometrica (49): 1057-1072. Dornbush, R. and S. Fisher, 1980, “Exchange Rates and the Current Account”, American Economic Review, 70, 960-971. Engle, R.F. ve C.W.J. Granger (1987) “Cointegration and error correction: representation, estimation and testing”, Econometrica, 55, 251-76. Gavin, M., 1989, "The Stock Market and exchange Rate Dynamics", Journal of International Money and Finance, 8, 181-200. Granger, C. W. J. and P. Newbold (1979). “Spurious in Econometrics”, Journal of Economics (2): 111-120. Gujarati, D. N. (1999). Temel Ekonometri (Çeviri: Ü Şenesen, G. G. Şenesen), Đstanbul: Literatür. Gupta, Jyoti P., Chevalier, A. and Sa yekt, F., "The Causality Between Interest Rate, Exchange Rate and Stock Price in Emerging Markets: The Case of the Jakarta Stock Exchange" (undated). EFMA 2000 Athens. Available at SSRN: http://ssrn.com/abstract=251253 Johansen, S. and K. Juselius, 1990, "Maximum Likelihood Estimation and Inference on Cointegration with Applications to the Demand for Money", Oxford Bulletin of Economics and Statistics 52, 169-210. Kim, K. (2003), Dollar exchange rate and stock price: evidence from multivariate cointegration and error correction model, Review of Financial Economics, Volume 12, Number 3, 2003 , pp. 301-313(13) Mckinnon, J. G. (1990). “Critical Values for Co-integration Tests”. UC San Diego Discussion Paper, 90-4. Muhammad, N., Rasheed, A. (2003) “Stock Prices and Exchange Rates: Are they Related? Evidence from South Asian Countries”, Paper presented at the 18th Annual General Meeting and Conference of the Pakistan Society of Development Economists on January 2003. Access fromhttp://www.pide.org.pk/PSDE/Stock%20Prices%20and%20Exchange%20Rates.pdf Murinde, V., Poshakwale, S., "Exchange Rate and Stock Price Interactions in European Emerging Financial Markets Before and After the Euro" (January 2004). EFMA 2004 Basel Meetings Paper. Available at SSRN: http://ssrn.com/abstract=493543 Phylaktis K. and Ravazzolo F. (2000), “Stock Prices and Exchange Rate Dynamics”, Paper presented at the EFMA 2000 Meeting in Athens, www.cass.city.ac.uk/emg/workingpapers/stock prices and exchange.pdf erişim tarihi:23/06/2007 ROLL, R., 1992, "Industrial Structure and the Comparative Behaviour of International Stock Market Indices", Journal of Finance, 47, 3-41. Soenen, L.A. and E.S. Hennigar, 1988, "An Analysis of Exchange Rates and Stock Prices - The US Experience between 1980 and 1986", Akron Business and Economic Review, (Winter), 7-16. Stavarek, D, (2004), “Comparison of financial markets development in the Czech Republic and in the European Union”, The paper was prepared due to support of the Grant Agency of the Czech Republi,. Project No. GAČR 402/02/1408 http://129.3.20.41/eps/fin/papers/0406/0406006.pdf erişim tarihi:23/06/2007 305 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 229 Title A name given to the resource Relation between Real Effective Exchange Rate And IMKB -100 Index (Istanbul Stock Exchange) Author Author TOPAL, Yusuf AKGÜN, Ali Abstract A summary of the resource. Stock exchange is a market where long-term investment instruments are purchased and sold such as share certificates, bonds etc. Stock exchange market is divided into two; developed and emerging stock markets. Developed stock markets are financial markets with a great depth which display activity in industrialized countries and constitute international financial market. Emerging stock markets are the stock exchange markets with a shallow depth which display activity in developing countries. Istanbul Stock Exchange has a rather important place among these stock exchange markets. Emergence of the new capital markets, increase in financial liberalization and expansion of flexible exchange rate regimes caused an increase in the examination of exchange rate and stock exchange market. Developing economies that gradually abolished control on exchange rate, paved the way for international investments and portfolio diversification. Today, it’s seen that savers basically directs the funds in their hands to three instruments for the purpose of investment. They are interest, foreign exchange and stock exchange market. Investors who are the savers attempts to increase their returns in the maximum rate with the portfolios they constituted from among these three instruments. When the literature is examined, it’s seen that there are many studies which examined relation between interest and stock exchange market from among these financial instruments. Result from these studies is that there is a negative, that is, an inverse relation between stock exchange market indices and interest rates. And purpose of this study is to see whether or not there is any long-term relation between real efefctive exchange rate and IMKB-100 index (Istanbul Stock Exchange), if any, to determine the direction of this relation. In this study, three-month data of real effective exchange rate (REDK) and IMKB-100 index for 1990-2005 periods have been used. Starting point of study is the year 1990. Its reason is to test presence of long term relation between real effective exchange rate (REDK) and IMKB-100 index by using long-term data that we could reach. Data sets used in study are the values of indices and were received from Central Bank Electronic Data Distribution, Republic of Turkey (EVDS). Long-term relation was examined and empirical findings were proved by using Johansen-Juselius co-integration test (JJ). As a result of examination above, it was ensued that ther was a long-term positive relation between real effective exchange rate (REDK) and IMKB-100 index (Istanbul Stock Exchange). Date A point or period of time associated with an event in the lifecycle of the resource 2009-06 Keywords Keywords. Conference or Workshop Item PeerReviewed HB Economic Theory https://omeka.ibu.edu.ba/files/original/8375751987a235ef455fb81584895dfb.pdf 35329e1cff3acb544e0b45dd3dd087ac PDF Text Text International Conference on Economic and Social Studies, 10-11 May, 2013, Sarajevo Relationship between Energy Consumption and Economic Growth: The Case of Turkey Ayşe Çoban Selçuk University, Konya, Turkey aysecoban2007@hotmail.com Mücahide Küçüksucu Selçuk University, Konya, Turkey akpinar.m@hotmail.com Orhan Çoban Selçuk University, Konya, Turkey ocoban@selcuk.edu.tr "Power" phenomenon has always been important throughout the history of mankind. In the past, the territory of the countries that they have the power, as measured by the colonies or the army, these parameters gave place as well as a stable economy and have owned the most effective utilization of resources. Definitely, the most recently prominent sources are energy. In this context, energy has a strategic importance for the countries, and that is used to measure the wealth and development. Turkey, has an important position as the Middle East's, Asian countries', the Mediterranean's and the Caspian region's rich oil and natural gas resources is transmitted to centers of demand in the West by "energy corridor". Due to its geopolitical position, Turkey must perform all policies including growth policies with energy policies harmonizing. The world's energy consumption is expected to increase and the majority of consumption is satisfied from in this region including Turkey. In this context, Turkey is a bridge as well as a market in order to transport Central Asia's production to the world's market due to the geographical and geopolitical position of Turkey. However, despite all these advantages, Turkish economy depends on foreign markets for energy. For this reason, the energy in the case of Turkey is becoming more and more important. Therefore, combining the issue of energy and growth, a long-term plan is needed. In the light of the foregoing, taking into consideration for the period of 1980-2011 in Turkey was aimed to analyze the relationship between energy consumption and economic growth in this study. In this analysis 45 �International Conference on Economic and Social Studies, 10-11 May, 2013, Sarajevo was benefited from the unit root test, VAR analysis, as well as the causality tests. The empirical findings for this period in Turkish economy show that the relationship between energy consumption and economic growth is bidirectional in Granger causality test, mutually affect each other and feedback hypothesis is available. When the feedback hypothesis is available, policy-makers must take into consideration feedback effect of economic growth on the energy in the event of reducing energy consumption. Bidirectional causality between energy consumption and economic growth or feedback evidence represents increasing economic growth causes to raise energy consumption. According to this view, energy-saving policies aimed at the reduction in energy use must reduce the demand for energy without causing adverse effects on economic growth. It would be achieved through a suitable combination of energy taxes and energy substitution. Policy makers should encourage the industry to adopt technologies for reducing pollution. Keywords: Energy Consumption, Economic Growth, Turkish Economy, Feedback Hypothesis 46 � https://omeka.ibu.edu.ba/files/original/4b37212002927444015ab8983133d99e.docx 1f6fc4a50e363043c0fffedce05e93ab https://omeka.ibu.edu.ba/files/original/7fd497027691ce284442aa82e7fc5b1a.pdf 3f98c71471f53323f5ca98ab44078fbe PDF Text Text International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Relationship between Energy Consumption and Economic Growth: The Case of Turkey1 Ayşe Çoban Selçuk University, Konya, Turkey aysecoban2007@hotmail.com Mücahide Küçüksucu Selçuk University, Konya, Turkey akpinar.m@hotmail.com Orhan Çoban Selçuk University, Konya, Turkey ocoban@selcuk.edu.tr Abstract "Power" phenomenon has always been important throughout the history of mankind. In the past, the territory of the countries that they have the power, as measured by the colonies or the army, these parameters gave place as well as a stable economy and have owned the most effective utilization of resources. Definitely, the most recently prominent sources are energy. In this context, energy has a strategic importance for the countries, and that is used to measure the wealth and development. Turkey, has an important position as the Middle East's, Asian countries', the Mediterranean's and the Caspian region's rich oil and natural gas resources is transmitted to centers of demand in the West by "energy corridor". Due to its geopolitical position, Turkey must perform all policies including growth policies with energy policies harmonizingly. The world's energy consumption is expected to increase and the majority of consumption is satisfied from in this region including Turkey. In this context, Turkey is a bridge as well as a market in order to transport Central Asia's production to the world's market due to the geographical and geopolitical position of Turkey. However, despite all these advantages, Turkish economy depends on foreign markets for energy. For this reason, the energy in the case of Turkey is becoming more and more important. Therefore, combining the issue of energy and growth, a long-term plan is needed. In the light of the foregoing, taking into consideration for the period of 1980-2011 in Turkey was aimed to analyze the relationship between energy consumption and economic growth in this study. In this analysis was benefited from the unit root test, VAR analysis, as well as the causality tests. The empirical findings for this period in Turkish economy show that not the relationship between energy consumption and economic growth is bidirectional in Granger causality test, mutually affect each other and feedback hypothesis is not available. When the feedback hypothesis is available, policy-makers must take into consideration feedback effect of economic growth on the energy in the event of reducing energy consumption. A bidirectional causality between energy consumption and economic growth or feedback evidence represents increasing economic growth causes to raise energy consumption. According to this view, energy-saving policies aimed at the reduction in energy use must reduce the demand for energy without causing adverse effects on economic growth. It would be achieved through a suitable 1 This study was supported by Selcuk University Scientific Research Projects Unit. Project No: 13701102. 70 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo combination of energy taxes and energy substitution. Policy makers should encourage the industry to adopt technologies for reducing pollution. Keywords: Energy Consumption, Economic Growth, Turkish Economy, Granger Causality Test, Feedback Hypothesis 1. Introduction Besides having energy resources, being able to reach them easily and uninterruptedly is of the most important energy policies of countries. In this frame, it is necessary to diversify energy resources. The countries having energy resources, together with technological transformation, attempted the effort to use the energy more effectively. In this scope, providing energy saving; realizing sustainable development, and minimizing the environmental effects of energy use constitute important titles of many discussions in recent years. The discussions in parallel with this shift from planning based on energy supply and energy generation to planning approach protecting the balance of energy economy – ecology carefully. In addition, models of energy safety considering the diversity of resource and geopolitical realities are also the most highlighted issues in recent times (Pamir, 2005:2). The main problem on energy use is that the policies of energy saving to be applied will affect the economic performance of country in what direction and how. On this point, the relationship of causality gains importance. The relationship of causality expresses which of two variables will appear earlier over time. With moving from here, studying the relationship of causality between the use of energy and growth gains impotence in terms of energy policies to be applied. As a matter of fact, introducing the relationship between energy consumption and economic growth is an important indicator in orientating energy polices in the energy depended counties, including Turkey. Beside this, also depending on the direction of causality, the energy policies to be applied will be different. Attracting attention to the issue energy corresponds to post - industrial revolution period. Energy is s necessary input that is obligatory to use in the production, and necessary to be able to raise the welfare levels of societies. 1970s, due to the fact that it is so cheaply available and it abounds, it could be used in country economies in large rates. Because of energy shocks experienced, beginning from 1970s, that energy prices raise very rapidly, affected the growth rate of world economies in negative direction. This situation made obligatory the application of energy saving processes. After the pain process specified, in the developed and developing countries, the relationship energy consumption and economic growth has begun to occupy the agenda. In the passing 30 years „period, this issue was heavily considered in academic studies. Energy is one of the most important issues in the development of Turkey. In this context, the use of energy constitutes a base besides improving the quality of life and for economic and social development in Turkey. Along with the increase seen in population and industrialization rapidity in Turkey, the energy demand is increasing every passing day. Turkey continuing he process of EU membership insistently, for the sake of proving adaptation process, principally the polices of infrastructure, environment, energy, and growth, realizes important transformations in a number of areas. Also, Turkey is an indispensable energy corridor for transporting the energy such as oil and natural gas, 71 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo produced in Middle East, Asia, Mediterranean, and Caspian Sea Region, to Europe. Increase is expected in the energy consumption of world, but in near future, a large part of energy consumption will be met from this area including Turkey as well. In other words, Turkey, due to its geographical and economic position, is a both market and bridge for the transportation of the production in Central Asia to the world markets. In addition to all of these, from the view point of Turkey, completely foreign – dependent in supplying energy, the important of energy issue is increasingly much more. Hence, in Turkey, there is a need for long termed plan blending the energy and growth. In the light of those mentioned above, the main purpose of this study, in addition to introducing the relationship between energy consumption and economic growth in terms of Turkish economy, is to make offers for policy. In order to realize this aim, after the concepts of energy consumption and economic growth are considered, in the frame of literature, the relationship energy consumption – growth will be analyzed. 2. Clarification of the Concepts of Energy and Growth The word energy is a Greek originated is a word and the words of “en” (internal) and “ergon” (work) are constituted. Later, the word gained a social attribute and was begun to be used synonymously with the ability to produce work, dynamism, force, power, and activity (Demirbaş, 2002:1). Energy having an important place in terms of both supply and demand is a consumable material that a consumer decided to purchase for maximizing his/her utility. from the viewpoint of demand (Chontanawatt et al., 2008: 137) For the commonly using areas of energy as a consumable material, cleanup, travel, and listening to music can be given as an example. Energy, from the viewpoint of supply, is a basic production inlet in addition to raw material, labor, and capital (Chontanawatt, et al., 2008: 138). In this scope, energy resources have three remarkable characteristics in the way that it emerges from environmental pollution, depending on scarcity, worldwide unequal distribution, and use. As the amount of energy used in industry, when it is assumed that the amount of production, in turn, output will increase, in the frame of single sectored neoclassic production technology, capital, labor force, and energy are defined as separate inlets (Aytaç, 2010: 483) This situation neglected until oil crises experienced in 1970s, beginning from the years ıf crisis, introduced the importance of energy, as a separate production inlet form labor and capital. Now, while the output in production function is explained, beside labor and capital, energy was also begun to take place as a production input. Setting out from a neoclassic perspective, in order to introduce the factors reducing and increasing the relationship between energy consumption and economic growth, the equation of production function can be expressed as in Equation (1) (Stern, 2003: 21-22): (Q1 ,........., Qm  f ( A, X 1 ,......, X n , E1 ,......., E p ) (1) In the equation above, Q1 represents output; X1, the inputs such as labor and capital; , E1, the inputs such as coal and oil; and A, technology, defined by total factor productivity With moving from here, the relationship between energy and GDP is influenced from the substation relationship between energy and the other inputs, variation occurring in A, technological change, variation in the composition of energy input, and in the composition of GDP (Stern, 2003: 22). 72 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo With moving from energy consumption, the relationship energy consumption and economic growth is described based on Medlock and Soligo (2001). In Medlock and Soligo (2001), energy consumption (ect) is expressed as a function of income pe capita (yt), energy prices (pt), and technology (At) as in Equation (2): ect  f ( yt , pt , At ) (2) In Equation (2), technology is assumed to be a function of energy prices and income level. By moving from here, the function associated with energy consumption can be expressed as in Equation (3): ect , j  f ( yt , pt , j , A( yt , pt , j )) (3) where subscript j represents final use related to household, commercial transportation, industry, and the other sectors and is obtained from the variable income. In addition, to simplify, it is assumed that technology may be for labor- capital. 3. Literature Some of the studies that are remarkable in the literature presenting the relationship between energy consumption and economic growth are considered as follows: Akarca and Long (1980), in their studies including in the period 1950-1970, using the method of Sims Causality Test, analyzed the relationship energy consumption – growth. According to the results of analysis, they did not meet any relationship between energy consumption and economic growth. Yu and Hwang (1984),in their studies, utilizing the variables energy consumption and employment, conducted Sims Causality Test. They identified that there was no relationship between energy consumption and growth. Erol and Yu (1987), in their analyses they carried out, using the data of national income and energy, they determined that there was no relationship between energy consumption and economic growth. Hwang and Gum (1991) studied the relationship energy consumption- economic growth for Taiwan. As a result of analyzes, where Granger causality test was regarded, they determined that there was a double directional causality relationship from consumption to growth and from economic growth to energy consumption. Stern (1993), using the variables of GDP, energy consumption, labor, and capital, via the econometric methods of Granger Causality Test and VAR, considered the relationship between the variables of interest. As a result of analyzes, they determined that there was a causality relationship from energy consumption to growth. Hondroyiannis et al. (2002), using the variables of total energy consumption, hosing energy consumption, industrial energy consumption, and consumer price index via the methods Johansen and Juselius co-integration test and ECM, analyzed the relationship between energy consumption and economic growth. The results of analysis showed that 73 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo there was a double directional relationship between energy consumption and economic growth. Paul and Bhattacharya (2004), using the variables of national income, commercial energy consumption, gross fixed capital formation, and population, via Johansen co-integration test and Granger causality test, analyzed the relationship between energy consumption and economic growth. The results of analysis revealed that there was a double directional causality relationship between energy consumption and growth. Hatemi and Irandoust (2005), with the variables of real GDP, and energy consumption, consumer price index, utilizing Leveraged Bootstrap Simulation Approach, considered the relationship between energy consumption and economic growth. According to this, they identified that there was a causality relationship between the variables, and that the direction of relationship was from economic growth to energy consumption. Tehranchian (2006), for Iran, analyzed the variables of real GDP, total energy consumption, natural gas consumption, and hydraulic energy consumption via Johansen Co-integration Test and VECM analysis. As a result of analyses, a relationship was determined from economic growth to energy consumption. Mucuk and Uysal (2007), for Turkey economy, studied the relationship between energy consumption and economic growth, using co-integration and Granger causality tests. Empirical findings showed that the variables were co-integrated and that Granger causality was from energy consumption to economic growth. Jobert and Karanfil (2007), in Turkey, analyzed the relationship between energy consumption and national income in the level of both macro and industry. According to Johansen co-integration test, it was determined that there was no relationship in long period between real GDP and energy consumption, and between industrial energy consumption and industrial added value. Erdal et al. (2008), for Turkey, moving from the data of the period 1970 -2006, analyzed the relationship between energy consumption and GDP. The results of Johansen cointegration and Pair-wise Granger causality tests revealed that there was a interrelation between the variables considered. Kar and Kınık (2008) analyzed the relationship between industrial electricity consumption, household electricity consumption, and total energy consumption and economic growth .The results of Johansen co-integration test, showed, in long period, that there was a relationship between industrial, household, and total energy consumptions and economic growth; and Vector Error Correction Model (VECM) also showed that the direction of causality realized from electricity consumption to economic growth. It was only determined that there was a double directional relationship between household electricity consumption and economic growth. Bartleet and Gounder (2010) for New Zeeland, with the variables of GDP; total energy consumption, energy prices, using ARDL and Granger causality test, studied the relationship between energy consumption and economic growth. According to the results of analysis, it was determined that there was a single directional causality relationship from energy consumption to growth. 74 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Çoban and Yorgancılar (2011) analyzed the relationships between renewable energy consumption and sustainable economic growth. According to the results of analysis, it was determined that all variables associated with renewable energy consumption had a positive directional effect on the growth. 4. Methodology In this study, in Turkey, the relationship between energy consumption (Energy) and economic growth (Growth) was analyzed. In analyses, the annual data belonging to the period 1980 – 2011, obtained from TÜİK (Turkish Statistical Institute) as well as Ministry of Energy and Natural Resources, were used. Analysis,unit root test, VAR analysis andGranger causalitytest is used. The first step in constructing time series data is to determine the non-stationary property of each variable. We must test each of the series in the levels and in the first difference. All variables were tested in levels using the Augmented Dickey-Fuller (ADF) Test. If the stationary test is significant, the variable series is stationary and does not have a unit root test. Thus, the null hypothesis will be rejected, but the alternative hypothesis will be accepted. However, if the stationary test is not significant, the variable series is non-stationary and has a unit root test; thus, null hypothesis will be accepted (Shaari et al., 2013: 21). Variance decomposition decomposes the variation in one of the internal variables as separate shocks affecting all internal variables. In this sense, variance decomposition gives information about dynamic structure of the system. The aim of variance decomposition is to reveal the effect on error structure of the prediction for the next periods of each random shock While which one is the most effective variable on a macroeconomic growth is determined via variance analysis, whether or not these variables that are detected effective are usable as political instrument and cause –effect functions are identified (Sarı, 2008: 4). The relationship between two economic variables and the answer of question of whether or not these affects to each other are first studied by Granger (1981). In the causality test incorporated to literature by Granger, Notation (1) is referred (Çoban ve Yorgancılar, 2011: 9): γt = α + βxt + εt In this equation, Granger put forward that in order to be able to make a contact between the exploratory and explained variables, and both sides of equality should be consistent. For example if yt is a seasonal variable, xt must also be a seasonal variable and in such a situation, εt is in the position of white noise. In identifying the causality in the sense of Granger, while x is datum null hypothesis (H 0: α = 0) is set as “X does not Granger cause Y”. This means that both and delays in cointegration vector influence y. In causality test, null hypothesis is tested by using F test and in case that one or both of two factors expressed together influence y, hypothesis is refused (Çoban, 2002: 38; Çoban, 2004: 8; Çoban et al, 2008). 75 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo 5. Analyses and Results In this study, firstly, in order to determine whether the variables used in analyses are stable or mot, ADF unit root test developed by Dickey-Fuller was referred to (Table-1). Table- 1:ADF Test Results for Unit Roots Level Prob.* First differences (Intercept) Prob.* (Intercept) Energy 1.120296 0.9968 Growth -6.335408 0.0000 -5.424374 0.0001 *MacKinnon (1996) one-sided p-values. According to Table 1, it was determined that the variable growth becomes stable in the level of I(0), while the variable consumption becomes stable in the level I(1). The findings obtained point out that for the variables taking place in the scope of study the rank of integration is I(0,1). Before passing to Granger causality test, it is necessary to determine the lag belonging to autoregressive model. The most important method used in assigning lag value is the method of comparing the values of Akaiki information criterion in VAR analysis. According to VAR method, the best lag was calculated by Akaiki Information Criterion as 1. The primary hypothesis (H0) and alternative hypothesis (H1)) that are established according to the energy consumption, are as follows: H0:. Energy consumption is not the cause of economic growth. H1: Energy consumption is the cause of economic growth. The hypotheses established according to economic growth are: H0: Economic growth is not the cause of energy consumption. H1: Economic growth is the cause of energy consumption. With moving from these hypotheses, the results of dual Granger causality test are as in Table 2. Table- 2: Granger Causality Test Results Pairwise Granger Causality Tests Date: 01/24/13 Time: 17:04 Sample: 1980 2011 Lags: 1 Null Hypothesis: Obs F-Statistic Probability Growth does not Granger Cause 30 Energy 0.0623 0.9377 Energy does not Granger Cause Growth 0.08512 0.7727 According to Table 2, in the significance level of 10%, the probabilities belonging to Fstatistical values are not significant. Therefore, there is not any causality relationship 76 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo between energy consumption and growth. Thus, our results of Granger causality tests do not support the feedback hypothesis. 6. Discussion and Conclusion In this study, in Turkey, the relationships between energy consumption and growth were analyzed. In the analyses, annual data belonging to the period 1980-2011. In Turkey, in recent years, also depending on economic stability, an important process of growth is experienced. The resources of this process should be determined. In this context, while energy demand is rapidly increasing, energy consumption remained in the highly back of energy demand. However, the energy produced and consumed by Turkey presents a structure different from each other in terms of its subtypes. As a matter of fact, in Turkey, energy demand is met from the resources imported such as oil and natural gas and energy production is from lignite and renewable energy far away from meeting the demand of country. In such a situation, foreign dependency of Turkey increases, and in any case that there is any problem, leads economic growth to be influenced negatively. All causes expressed above emphasizes that, for Turkish economy, determining whether or not there is a causality relationship between energy consumption and economic growth is so important. However, in the study we carried out for this aim, it was determined that there was no causality relationship between energy consumption and economic growth and thus, that the feedback hypothesis was not supported. When considering from this point of view, the results of our study overlap with the results of the studies by Akarca and Long (1980), by Yu and Hwang (1984), and by Erol and Yu (1987), by Inbert and Karanfil (2007). As a conclusion, in our study, even though a causality relationship between energy consumption and economic growth revealed, the importance of energy in terms of economic development cannot be ignored. In this meaning, policymakers and decision mechanisms should pay attention the relationship between two variables. When the policies for energy saving toward reducing energy intensity, promoting the use of alternative renewable energy resources, increasing energy efficiency, the investments on technological development improving energy efficient and developing the feasibility of renewable energy resources are under consideration, it can be said that economic growth will not be negatively affected from decrease of energy consumption. 7. References Akarca, A. T.,& Long, T.V. (1980). On the relationship between energy and GNP: a reexamination. The Journal of Energy and Development, 5(2), 326-331. Bartleet, M.,& Gounder, R. (2010). Energy consumption and economic growth in New Zealand: results of trivariate and multivariate models. Energy Policy, 38(7), 35083517. Chontanawat, J., Hunt, L.C., & Pierse, R. (2008). Does energy consumption cause economic growth? evidence from systematic study of over 100 countries. Journal ofPolicy Modelling, 30, 209-220. 77 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Çoban, O. (2002). Econometric analysis of the relationship between money supply, inflation and interest rates in Turkish and German economies. Ataturk University Journal of Economics and Administrative Sciences Faculty, 16 (5–6), 32–41 (in Turkish). Çoban, O. (2004). The effects of human capital on economic growth: the case of Turkey. Journal of Istanbul University, 30, 131-142 (in Turkish). Çoban, O., Doganalp, N., & Uysal, D. (2008). The macroeconomic effects of public internal borrowing in Turkey. Journal of Selcuk University Social Sciences Institute, 20, 245-257 (in Turkish). Çoban, O.,& Yorgancılar, F. (2011). Relationship between renewable energy consumption and sustainable economic growth: the case of Turkey. 2011 Barcelona European Business&Economics Conference, Juni 6-9, Barcelona, Spain. Erdal, G., Erdal, H., & Esengün, K. (2008). The causality between energy consumption and economic growth in Turkey. Energy Policy, 36(10), 3838-3842. Erol, U.,& Yu, E.S.H. (1987). Time series analysis of the causal relationships between us energy and employment. Resources and Energy, 9(1), 75-89. Hatemi, A.,& Irandoust, M. (2005). Energy consumption and economic growth in Sweden: a leveraged bootstrap approach, 1965-2000. International Journal ofApplied Econometrics and Quantitative Studies, 2(4), 87-98. Hondroyiannis, G., Lolos, S., & Papapetrou, E. (2002). Energy consumption and economic growth: assessing the evidence from Greece. Energy Economics, 24(4), 319-336. Hwang, D.,& Gum, B. (1991). The causal relationship between energy and GNP: the case of Taiwan”, Journal of Energy and Development, 16(2), 219–226. Jobert, T.,& Karanfil, F. (2007). Sectoral energy consumption by source and economic growth: the case of Turkey. Energy Policy, 35(11), 5447-5456. Kar, M.,& Kınık, E. (2008). Türkiye‟de elektrik tüketimi çeşitleri ve ekonomik büyüme arasındaki ilişkinin ekonometrik bir analizi. Afyon Kocatepe ÜniversitesiİİBF Dergisi, 10(2), 333-353 (in Turkish). Mucuk, M.,& Uysal, D. (2007). Türkiye ekonomisinde enerji tüketimi ve ekonomik büyüme. Maliye Dergisi, 157, 105-115 (in Turkish). Pamir, N. (2005), Enerji politikaları ve küresel gelişmeler. Türkiye 5. Enerji Sempozyumu Bildiriler Kitabı, Ankara, 57-83 (in Turkish). Paul, S.,& Bhattacharya, R.N. (2004). Causality between energy consumption and economic growth in India: a note on conflict results. Energy Economics, 26, 977983. 78 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Shaari M.S., Hussain, N.E., & Ismail, M.S. (2013). Relationship between energy consumption and economic growth: empirical evidence for Malaysia. Business Systems Rewiev, 2(1), 17-28. Stern, D.I. (1993). Energy and economic growth in the USA- a multivariate approach. Energy Economics, 15(2), 137-150. Stern, D.I. (1999). Is energy cost an accurate indicator of natural resource quality?.Ecological Economics, 31, 381–394. Stern, D. I. (2000). A multivariate cointegration analysis of the role of energy in the U.S. Macroeconomy. Energy Economics, 22(2), 267-283. Stern, D.I. (2003). Energy and economic growth, Retrieved February 02, 2013, from http://www.localenergy.org/pdfs/Document%20Library/Stern%20Energy%20and% 20Economic%20Growth.pdf. Tehranchian, A.M. (2006). On the relationship between energy consumption and real GDP in Iran: an application of VEC model. Iranian Economic Review, 11(16), 141-147. Yu, E.S.H. & Hwang, B.K. (1984). The relationship between energy and GNP: further results”, Energy Economics, 6(3), 186-190. 79 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1498 Title A name given to the resource Relationship between Energy Consumption and Economic Growth: The Case of Turkey Author Author COBAN, Ayse KUCUKSUCU, Mucahide COBAN, Orhan Abstract A summary of the resource. "Power" phenomenon has always been important throughout the history of mankind. In the past, the territory of the countries that they have the power, as measured by the colonies or the army, these parameters gave place as well as a stable economy and have owned the most effective utilization of resources. Definitely, the most recently prominent sources are energy. In this context, energy has a strategic importance for the countries, and that is used to measure the wealth and development. Turkey, has an important position as the Middle East's, Asian countries', the Mediterranean's and the Caspian region's rich oil and natural gas resources is transmitted to centers of demand in the West by "energy corridor". Due to its geopolitical position, Turkey must perform all policies including growth policies with energy policies harmonizing. The world's energy consumption is expected to increase and the majority of consumption is satisfied from in this region including Turkey. In this context, Turkey is a bridge as well as a market in order to transport Central Asia's production to the world's market due to the geographical and geopolitical position of Turkey. However, despite all these advantages, Turkish economy depends on foreign markets for energy. For this reason, the energy in the case of Turkey is becoming more and more important. Therefore, combining the issue of energy and growth, a long-term plan is needed. In the light of the foregoing, taking into consideration for the period of 1980-2011 in Turkey was aimed to analyze the relationship between energy consumption and economic growth in this study. In this analysis was benefited from the unit root test, VAR analysis, as well as the causality tests. The empirical findings for this period in Turkish economy show that the relationship between energy consumption and economic growth is bidirectional in Granger causality test, mutually affect each other and feedback hypothesis is available. When the feedback hypothesis is available, policy-makers must take into consideration feedback effect of economic growth on the energy in the event of reducing energy consumption. Bidirectional causality between energy consumption and economic growth or feedback evidence represents increasing economic growth causes to raise energy consumption. According to this view, energy-saving policies aimed at the reduction in energy use must reduce the demand for energy without causing adverse effects on economic growth. It would be achieved through a suitable combination of energy taxes and energy substitution. Policy makers should encourage the industry to adopt technologies for reducing pollution. Keywords: Energy Consumption, Economic Growth, Turkish Economy, Feedback Hypothesis Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2013-05-10 Keywords Keywords. Article PeerReviewed Identifier An unambiguous reference to the resource within a given context ISSN 978-9958-834-23-3 https://omeka.ibu.edu.ba/files/original/363a8d6154b2743e4df55a4e29c49d7f.pdf 924c0b771c25bfd5c2b796f31d5ce3f6 PDF Text Text International Conference on Economic and Social Studies, 10-11 May, 2013, Sarajevo Relationship between Families’ and Schools in Battling Narcotics and Drugs Fatima Karišik International University in Novi Pazar, Novi Pazar, Serbia fatimakarisik@yahoo.com Alarming data about the number of young people who abuse drugs and drug clearly indicate the topicality of studying this subject. There is more meaning to this topic and also is socially important because the youth is the pillar of any society. Social significance is reflected in the fact that society has an important role in reducing substance abuse and drugs. Studying and developing cooperation with families and schools to fight substance abuse and drug use is very important for pedagogy as a science of education, especially for the families and school counselors. The situation as it is now in our society unambiguous and clearly shows that have already matured enough to form its own sub discipline pedagogical way to deal with the phenomenon of combating substance abuse and drugs. To achieve success in solving the problem of family and school cooperation has to be at a high level, it must be continuous with continuous exchange of views and ideas on solving it. Educational influences of family and school are a very powerful tool when it comes to the formation of a healthy personality and quality, which will be capable of resisting the most difficult types of voices. Until recently even in pedagogical circles, they supported the view that it is best not to talk about drugs in the school, because it was thought that people would be awakened and deepened curiosity. It is important to emphasize that this is a very wrong attitude; on the contrary we believe that children need to talk openly about it, both with their families and at school. Because the family and school environment conducive to the creation of a free individual, the freeing of his creative potential and self-confidence, we believe that an institution of vital importance to the individual and are essential for solving an instance of such a complex problem. Keywords: Family, School, Education, Drugs and Drug Community. 116 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1549 Title A name given to the resource Relationship between Families’ and Schools in Battling Narcotics and Drugs Author Author KARIŠIK, Fatima Abstract A summary of the resource. Alarming data about the number of young people who abuse drugs and drug clearly indicate the topicality of studying this subject. There is more meaning to this topic and also is socially important because the youth is the pillar of any society. Social significance is reflected in the fact that society has an important role in reducing substance abuse and drugs. Studying and developing cooperation with families and schools to fight substance abuse and drug use is very important for pedagogy as a science of education, especially for the families and school counselors. The situation as it is now in our society unambiguous and clearly shows that have already matured enough to form its own sub discipline pedagogical way to deal with the phenomenon of combating substance abuse and drugs. To achieve success in solving the problem of family and school cooperation has to be at a high level, it must be continuous with continuous exchange of views and ideas on solving it. Educational influences of family and school are a very powerful tool when it comes to the formation of a healthy personality and quality, which will be capable of resisting the most difficult types of voices. Until recently even in pedagogical circles, they supported the view that it is best not to talk about drugs in the school, because it was thought that people would be awakened and deepened curiosity. It is important to emphasize that this is a very wrong attitude; on the contrary we believe that children need to talk openly about it, both with their families and at school. Because the family and school environment conducive to the creation of a free individual, the freeing of his creative potential and self-confidence, we believe that an institution of vital importance to the individual and are essential for solving an instance of such a complex problem. Keywords: Family, School, Education, Drugs and Drug Community. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2013-05-10 Keywords Keywords. Article PeerReviewed Identifier An unambiguous reference to the resource within a given context ISSN 2303-4564 https://omeka.ibu.edu.ba/files/original/e2e4cace0bfe4b9ba580bf6e549e83ff.pdf 435ec2257e69e8043412353424e47459 PDF Text Text Journal of Economic and Social Studies Relationship Between Human Capital and Economic Growth: Panel Causality Analysis for Selected OECD Countries Ferdi KESİKOĞLU Bülent Ecevit University, Zonguldak, Turkey fkesikoglu@yahoo.com Zafer ÖZTÜRK Bülent Ecevit University, Zonguldak, Turkey zaferoz@hotmail.com ABSTRACT In this study, the relation between education and health expenditures KEYWORDS that are accepted as an indicator of human capital and economic Education expenditures, health growth is tested empirically. According to the findings of the study, care expenditure, human capital, based on 1999 – 2008 period for 20 OECD countries that are selected economic growth, panel causality. by the panel casuality test, a bidirectional casuality relation is observed between the education and health expenditures and economic growth in the period and country group under discussion. The obtained findings both support the intrinsic growth theories and tally with the empirical studies on the subject. ARTICLE HISTORY Submitted: 14 August 2012 Resubmitted: 07 Januar 2013 Accepted: 15 March 2013 JEL Code: O10, O15 Volume 3 Number 1 Spring 2013 153 �Ferdi KESİKOĞLU / Zafer ÖZTÜRK Introduction Studies on growth in the economics literature are usually divided into two groups. The first one is the Neo-classical growth theory that was dominant until 1980s and it identifies the source of economic growth with technology and increase in population which is considered as external in the model. The Neo-classical growth theories, which take shape depending upon savings, capital-labour and income variables, propound that there will be no long-term discrepancy between countries in terms of level of development. The theories that emerged as alternatives to the Neo-classical theory are called as endogenous growth theories. Emerging endogenous growth theories bring forward the idea that endogenous conditions like human capital, foreign trade policies, financial development and public expenditures of a country can affect economic growth. Considering the subject within the frame of endogenous growth theories, it is ascertained that the human capital resources of a country have a great impact on growth. In recent years, the empirical studies on economic growth also increasingly emphasize the role of human capital in economic growth process. As often expressed in the empirical studies, the most important indicators of the human capital are health care and education. For education and health, the number of people graduated from collages and life expectancy at birth or total public expenditure intended on education and health care are used as variables in empirical models. Education and health care expenditures increase the quality of labour force and positively contribute to the production capacity and thus to the economic growth. It is also emphasized by the endogenous growth theories that in the development process, health care and education expenditures play an important role in the formation of human capital and have a significant contribution to the sustainable economic growth in longterm. In this study, within the frame of theoretical and empirical arguments presented above in summary, the relationship between education, health care expenditures and economic growth is tested by the panel causality test for 20 OECD member countries that are selected considering data sufficiency for 1999 – 2008 period. In the first part of the study that composed of three parts, the theoretical frame is presented. After the second part that summarizes the findings of relevant empirical studies, the empirical model and the findings of the model are evaluated. The study reveals the importance of human capital for economic development. 154 Journal of Economic and Social Studies �Relationship Between Human Capital and Economic Growth: Panel Causality Analysis for Selected OECD Countries Empirical Literature Empirical literature about the relationship between human capital and economic growth is summarized in Table 1. Table 1. The Empirical Literature Author Method Romer (1989) Endegenous 1960-1985 Growth Model Period Mulligan and Sala-i Martin (1992) Endegenous Growth Model Barro and Lee (1993) Panel Method Kelly (1997) Country Result Positive effect of education on Transnational growth Economic growth increases the rate of return on human capital 189 Country Positive effect of education on growth Ordinary Least 1970-1989 Squares 73 Country Do not have any effect on economic growth of health spending Rivera and Currais (1998) Ordinary Least 1960-1990 Squares OECD Countries Positive effect of health spending on economic growth Freire-Serén (2001) Two-Step OLS There are two-way causal Transnational relationship between human capital and economic growth Kar and Ağır (2003) Granger Causality, VECM 1960-1985 1960-1990 1926-1994 Turkey -causality of education spending to economic growth -causality of economic growth to health spending Serel and Johansen Masatçı (2005) cointegration 1950-2000 Turkey -Human capital has a positive effect on growth in the long term -Causality of economic growth to human capital Taban (2006) Johansen cointegration, Granger Causality 1968-2003 Turkey Two-way causal relationship between health indicators and economic growth Taban and Kar (2006) Granger Causality 1969-2001 Turkey Haldar and Mallik (2010) Johansen cointegration, ARDL 1960-2006 India Şimşek and Kadılar (2010) Keskin (2011) Yaylalı and Lebe (2011) Volume 3 Cointegraiton, granger 1960-2004 Turkey causality, ARDL Multiple 177 BM Linear Cross-Sectional Data Countries Regression Cointegraiton and VAR Number 1 1938-2007 Spring 2013 Turkey Two-way causal relationship between educaiton and economic growth investment in education and health are very important and has a significant positive long run effect on per capita GNP growth -Causality of human capital to GDP in the short and long term - Causality of GDP to human capital in the short term Has important effects on economic development, educatiton and health spending Two-way causal relationship between educaiton and economic growth 155 �Ferdi KESİKOĞLU / Zafer ÖZTÜRK Model, Data and Methods In this study, the estimated models are shown in the following equations. n l 1 k 1 m n l1 k 1 (1) D 0 � ¦ D lEDUCt �l � ¦ G k GDPt � k � u t EDUCt GDPt m D 0 � ¦ D lGDPt �l � ¦ G k EDUCt � k � u t GDPt m n l1 k 1 (2) D 0 � ¦ D lGDPt �l � ¦ G k HEALTH t � k � u t HEALTH t m n l1 k 1 (3) D 0 � ¦ D lHEALTH t �l � ¦ G k GDPt � k � u t (4) In the model, GDP symbolizes the rate of growth, EDUC symbolizes the GDP ratio of total education expenditures, HEALTH symbolizes the GDP ratio of total health expenditures, a and ds symbolize the parameters and m and n symbolize the lag length. According to Schwarz information criterion 3 is determined as the length of delay. Besides, employment (EMP) is added as a control variable to the model as it can be in relation to growth, education and health. The data used in the analysis is obtained from World Bank WDI, OECD-STAN data bases. The data set used icludes 1999 – 2008 period and 20 OECD member countries: Austria, Czech Republic, France, Hungary, Ireland, Israel, Italy, Japan, Holland, Spain, UK, Denmark, Germany, Poland, Portugal, Slovakia, Finland, Iceland and USA. According to Holtz-Eakin, Newey and Rosen (1988), the hypothesis test can be made in equation 5 in order to examine whether model in equation 1 cause GDP to EDUC and model in equation 2 EDUC to GDP. This hypothesis test can also be made for equations 3 and 4 that present the relation between GDP and HEALTH. G1 G 2 G3 0 (5) The economics literature suggests three approaches to test casuality in panel data set. The first approach is based on the generalized method of moments (GMM) and the Wald test in equation 3. The GMM method requires the panel data set to be N>T. The second one is suggested by Hurlin (2008) and fixed effects are based on panel data approach. The fixed effect panel data approach can be applied only for static series. The third one is proposed by Kónya (2006) and it is based on the estimates of seemingly unrelated regression (SUR). The last approach requires the panel data set 156 Journal of Economic and Social Studies �Relationship Between Human Capital and Economic Growth: Panel Causality Analysis for Selected OECD Countries to be T>N. In this study, the GMM - system approach is preferred since the data set used is N>T and some variables in the model are I(1). Holtz-Eakin, Newey and Rosen (1988), Arellano and Bond (1991), Arellano and Bover (1995) and Blundell and Bond (1998) developed the GMM – system approach which can solve the endogeneity and it can be and applied to T<N feature samples. This method is basically an instrumental variable method. It is based on producing instrumental variables which have the similar characteristics of moment instead of variables that are considered to have the problem of endogeneity and using instrumental variables in regression model. It is possible to express GMM  y  xi  u i (Cameron and estimator as in equation 6 for a model in the form of i Triverdi, 2009, p. 175): EˆGMM X cZWZ cX �1 (6) X cZWZ cy In equation 6, X represents the matrix of independent variable, Z represents the matrix instrumental variable, Y represents the matrix of dependent variable and W represents the matrix of symmetric weight. The GMM  estimator minimizes the objective function. The objective function is indicated in equation 7. Q( E ) ­1 ½ c ½ ­1 ® y � XE Z ¾W ® Z c y � XE ¾ ¯N ¿ ¯N ¿ (7) When the matrix of weight is taken in the quadratic form, it is equal to Z  y  X  . However, when the matrix of weight is selected as in two-staged least square the optimal GMM estimator is reached. The optimal GMM is indicated in equation 8. EˆOGMM X cZSˆ �1 Z cX �1 X cZSˆ �1 Z cy (8)   In the equation 8 Ŝ is the estimation of Var N 1 / 2 Z u . The efficiency of the GMM estimator depends on selecting the right matrix of instrumental variable. There are three tests used for this purpose. The first one is the AR(1) and AR(2) tests developed by Arellano and Bond (1991). The AR(1) test examines the null hypothesis in the form of “no first-order autocorrelation.” Because of the method of obtaining instrumental variable, first-order autocorrelation should be observed automatically in the error term of the model and the null hypothesis should be rejected at a %5 statistical significance level. Otherwise, it is understood that the instrumental variables cannot be determined correctly. On the other hand, AR(2) test examines the null hypothesis in the form of “no second-order autocorrelation.” The no second-order autocorrelation should not be rejected at a %5 statistical significance level in the model. Oth- Volume 3 Number 1 Spring 2013 157 �Ferdi KESİKOĞLU / Zafer ÖZTÜRK erwise, it is again understood that the instrumental variables cannot be determined correctly. The second test is known as the Sargan test. It examines the null hypothesis in the form of “instrumental variable is valid.” Therefore, the null hypothesis should not be rejected at a %5 statistical significance level. The last test is known as Hansen’s J test. The J test also examines the null hypothesis in the form of “instrumental variable is valid” and the null hypothesis should not be rejected at a %5 statistical significance level. Furthermore, if the tests are ranked according to the degree of reliability, AR(1) and AR(2) tests are in the first place, the Sargan test is in the second and the J test take the last place. Particularly, as the number of instrumental variables increase the success of the J test decreases (Roodman, 2006, p. 14). Finally, Windmeijer (2005) proved that the GMM estimate is exposed to small sample deviation in a finite number of observations and proposed a method to correct this small sample deviation that emerge in standart errors. Moreover, the author proves that when this deviation arising from the small sample is corrected, the deviations observed in standard errors and coefficients decrease as well. In order to correct the results of the GMM method used in this study, the correction proposed by Windmeijer (2005) is followed. The only code that can implement this correction is written by Roodman (2006). For this reason, the code written by Roodman (2006) is used for GMM estimation. Findings In table 2, the results of the model estimation that examines whether there is a casual relationship from education to growth is shown. Table 2. Estimation Results of Model 1 Independent Variables Coefficient GDPt-1 0.67* EDUC -6.19* 7.72* EDUCt-1 -0.75 EDUCt-2 -0.84 EDUCt-3 Arellano-Bond AR(1) Statistics Arellano-Bond AR(2) Statistics Corrected Standard Error 0.111 0.980 1.502 1.471 0.964 -4.21 (0.000) -0.79 (0.429) T Statistics 6.05 -6.32 5.14 -0.52 -0.88 F Statistics No. Of Observations Cross-Section Time Dimension Probability 0.000 0.000 0.000 0.607 0.382 18.56 (0.000)* 120 20 10 years Wald Statistics (EDUCt-1 = EDUCt-2 = EDUCt-3 = 0) Two Staged Panel GMMsystem Note: * symbol shows the %1 statistically significant coefficients. In the statistics related to the model, the values before the parentheses show the related statistic values and the values in parentheses indicate the possibilities. 10.94 (0.0071) 158 Method Journal of Economic and Social Studies �Relationship Between Human Capital and Economic Growth: Panel Causality Analysis for Selected OECD Countries According to the findings, the F statistics show that the model, as a whole, is statistically significant at a %5 significance level. The AR(1) statistics show first-order autocorrelation is observed in the error terms of the model and AR(2) statistics show no second-order autocorrelation. The Wald statistics that examine EDUCt-1 = EDUCt-2 = EDUCt-3 = 0 hyphothesis is rejected at a significance level of %1. This finding means that the education expenditures are the reasons of growth. In table 3, the results of the model estimation that examines whether there is a casual relationship from growth to education expenditures is shown. Table 3. Estimation Results of Model 2 Independent Variables Coefficient 0.954* EDUCt-1 GDP -0.041* 0.010 GDPt-1 0.034** GDPt-2 GDPt-3 0.006 Arellano-Bond AR(1) Statistics Arellano-Bond AR(2) Statistics Corrected Standard Error 0.038 0.009 0.015 0.015 0.012 -4.48 (0.000) 0.56 (0.577) Wald Statistics (GDPt-1 = GDPt-2 = GDPt-3 = 0) 10.49 (0.0071) T Statistics 25.03 -4.28 0.65 2.20 0.56 F Statistics No. Of Observations Cross-Section Time Dimension Method Probability 0.000 0.000 0.515 0.030 0.577 165.54 (0.000)* 120 20 10 years Two-Staged Panel GMMsystem Note: * symbol shows %1 ** shows %5 statistically significant coefficients. In the statistics related to the model, the values before the parentheses show the related statistic values and the values in parentheses indicate the possibilities. According to the no. 2 model estimation results, the model is significant at a %1 significance level and the instrumental variables are valid. Besides, the Wald statistics cannot reject the H0 hypothesis at %1, %5 and %10 significance levels in the form of growth is not the reason of education expenditures. In table 4, there are the results of a casual relationship research from health expenditures to growth that is stated above in no. 3 model. Volume 3 Number 1 Spring 2013 159 �Ferdi KESİKOĞLU / Zafer ÖZTÜRK Table 4. Estimation Results of Model 3 Independent Variables GDPt-1 HEALTH HEALTHt-1 HEALTHt-2 HEALTHt-3 Coefficient 0.462* -5.529* 6.072* -0.674 -0.467 Corrected Standard Error T Statistics 0.131 3.52 0.732 -7.55 1.260 4.82 1.292 -0.52 0.824 -0.57 Arellano-Bond AR(1) Statistics -4.20 (0.000) Arellano-Bond AR(2) Statistics -0.65 (0.513) Wald Statistics (HEALTHt-1 = HEALTHt-2 = HEALTHt-3 = 0) F Statistics No. Of Observations Cross-Section Time Dimension Method 17.05 (0.0000) Probability 0.001 0.000 0.000 0.603 0.572 24.09 (0.000)* 120 20 10 years Two-Staged Panel GMMsystem Note: * symbol shows %1 ** shows %5 statistically significant coefficients. In the statistics related to the model, the values before the parentheses show the related statistic values and the values in parentheses indicate the possibilities. According to the no. 3 model estimation results, the model is significant at a %1 significance level and the instrumental variables are valid. Besides, the Wald statistics cannot reject the H0 hypothesis at %1, %5 and %10 significance levels in the form of growth is not the reason of health expenditures. In table 5, there are the results of a casual relationship research from growth to health expenditures that is stated above in equation 4. Table 5. Estimation Results of Model 4 Independent Variables HEALTHt-1 GDP GDPt-1 GDPt-2 GDPt-3 Coefficient 0.928 -0.769 -0.005 0.009 0.040 Corrected Standard Error T Statistics 0.257 36.06 0.013 -5.84 0.020 -0.25 0.021 0.46 0.015 2.56 Arellano-Bond AR(1) Statistics -3.57 (0.000) Arellano-Bond AR(2) Statistics -0.18 (0.860) Wald Statistics (GDPt-1 = GDPt-2 = GDPt-3 = 0) 18.06 (0.0000) F Statistics No. Of Observations Cross-Section Time Dimension Method Probability 0.000 0.000 0.805 0.645 0.012 527.27(0.000)* 120 20 10 years Two-Staged Panel GMMsystem Note: * symbol shows %1 ** shows %5 statistically significant coefficients. In the statistics related to the model, the values before the parentheses show the related statistic values and the values in parentheses indicate the possibilities. 160 Journal of Economic and Social Studies �Relationship Between Human Capital and Economic Growth: Panel Causality Analysis for Selected OECD Countries According to results of no.4 model estimation results that is summarized in table 5, the model is significant at a %1 significance level and the instrumental variables are valid. Besides, the Wald statistics accept the that there is a casual relationship from growth to health expenditures at %1significance level . Conclusion In economic literature, two theoretical structures about economic growth that are endogenous and neo-classical, attract the attention. These theories, taking into account different criteria, provide a theoretical framework for growth. Endogenous growth theories discuss investments in human capital among the sources of growth. Studies that are done within the context of endogenous growth theories, variables are generally used as education and health expenditures for human capital. In this study the nexus between human capital and economic growth was tested empirically using panel causality test for 20 OECD countries. Achieved evidence indicates that there are bi-directional causal relationship between education expenses and economic growth. Furthermore two-sided causal relationship between health expenses and economic growth was found. These findings support the suggestion of endogenous growth theory which is a competitor of Neo classical growth theory. The findings prove similar results for the studies done with different countries, different time zones and different methods. In this context, the human capital investments that are represented by education and health expenditures have a positive effect on the economic growth of the countries. References Arellano, M. & Bond, S. (1991). Some tests of specification for panel data: Monte Carlo evidence and an application to employment. The Review of Economic Studies, 58(2), 277-297. Arellano, M. & Bover, O.(1995). Another look at the instrumental variable estimation of error-components models. Journal of Econometrics, 68, 29-51. Barro, R. J. & Lee J. W. (1993). International comparisons of educational attainment. NBER Working Paper Series, WP No: 4349. Blundell, R. W. & Bond, S. (1998). Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics, 87, 115-143. Volume 3 Number 1 Spring 2013 161 �Ferdi KESİKOĞLU / Zafer ÖZTÜRK Cameron, A. C. & Trivedi, P. K. (2009). Microeconometrics Using Stata. Stata Pres, Texas. Freire-Seren, M. J. (2001). Human capital accumulation and economic growth. Investigaciones Economicas, XXV (3), 585-602. Haldar, S. K. & Mallik, G. (2010). Does human capital cause economic growth? A case study of India. International Journal of Economic Sciences and Applied Research, 3 (1): 7-25. Holtz-Eakin, D., Newey, W. & H. Rosen (1988). Estimating vector autoregressions with panel data. Econometrica, 56, 1371-1395. Hurlin, C. (2008). Testing for Granger non-causality in heterogeneous panels, Hyper Articles en Ligne Sciences de I’Homme et Société, http://halshs.archives-ouvertes.fr/docs/00/22/44/34/PDF/Causality_WP.pdf. Kar, M. & Ağır, H. (2003). Türkiye’de beşeri sermaye ve ekonomik büyüme: Nedensellik testi. II. Ulusal Bilgi, Ekonomi ve Yönetim Kongresi Bildiriler Kitabı, (Derbent- Izmir), 181-190. Kelly, T. (1997). Public expenditures and growth. Journal of Development Studies, 34:1, 60-84. Keskin, A. (2011). Ekonomik kalkınmada beşeri sermayenin rolü ve Türkiye. Atatürk Üniversitesi İktisadi ve İdari Bilimler Dergisi, 25, 3-4, 125-153. Konya, L. (2006). Exports and growth: Granger causality analysis on OECD countries with a panel data approach. Economic Modelling, 23, 6, 978–992. Mulligan C. B. & Sala-i-Martin, X. (1992). Transitional dynamics in two-sector models of endogenous growth. NBER Working Paper Series, WP No:3986. Rivera, B. & Currais, L. (1999). Economic growth and health: direct impact or reverse causation?. Applied Economics Letters, 6:11, 761-764. Romer, P.M. (1989). Human capital and growth: theory and evidence. NBER Working Paper Series, WP No:3173. Roodman, D. (2006). How to do xtabond2: An introduction to “difference” and “system” GMM in stata. The Center for Global Development Working Paper Series, No. 103. Serel, H. & Masatçı K. (2005). Türkiye’de beşeri sermaye ve iktisadi büyüme ilişkisi: Ko-entegrasyon analizi. Atatürk Üniversitesi İktisadi ve İdari Bilimler Dergisi, 19, 2, 49-58. Şimşek M. & Kadılar, C. (2010). Türkiye’de beşeri sermaye, ihracat ve ekonomik büyüme arasındaki ilişkinin nedensellik analizi. C.Ü. İktisadi ve İdari Bilimler Dergisi, 11, 1,115-140. Taban, S. & Kar, M. (2006). Beşeri sermaye ve ekonomik büyüme: nedensellik analizi: 1969-2001. Anadolu Üniversitesi Soyal Bilimler Dergisi, 6, 1, 159-181. Taban, S. (2006). Türkiye’de sağlık ve ekonomik büyüme arasındaki nedensellik ilişkisi. Sosyoekonomi, Temmuz-Aralık 2006-2, 31-46. Windmeijer, F. (2005). A finite sample correction for the variance of linear efficient two-step GMM estimators. Journal of Econometrics, 126, 25-51. Yaylalı, M. & Lebe, F. (2011). Beşeri sermaye ile iktisadi büyüme arasındaki ilişkinin ampirik analizi, Marmara Üniversitesi İİBF Dergisi, XXX, I, 23-51. 162 Journal of Economic and Social Studies � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 2379 Title A name given to the resource Relationship Between Human Capital and Economic Growth: Panel Causality Analysis for Selected OECD Countries Author Author Kesikoglu, Ferdi ÖZTÜRK, Zafer Abstract A summary of the resource. In this study, the relation between education and health expenditures that are accepted as an indicator of human capital and economic growth is tested empirically. According to the findings of the study, based on 1999 – 2008 period for 20 OECD countries that are selected by the panel casuality test, a bidirectional casuality relation is observed between the education and health expenditures and economic growth in the period and country group under discussion. The obtained findings both support the intrinsic growth theories and tally with the empirical studies on the subject. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2013-03-10 Keywords Keywords. Article PeerReviewed H Social Sciences (General) https://omeka.ibu.edu.ba/files/original/ba339feba7f41fa19a069615a87d3ac0.pdf 8f847c23cc08fbcbe4382a11e8daf5b6 PDF Text Text 3rd International Symposium on Sustainable Development, May 31 - June 01 2012, Sarajevo Relationship Between Human Capital And Economic Growth: Panel Causality Analysis For Selected Oecd Countries Ferdi Kesikoğlu, Zafer Öztürk Bülent Ecevit University, Zonguldak, Turkey E-mails: fkesikoglu@yahoo.com, zaferoz@hotmail.com Abstract In this study, the relation between education and health expenditures that are accepted as an indicator of human capital and economic growth is tested empirically. According to the findings of the study, based on 1999 – 2008 period for 20 OECD countries that are selected by the panel casuality test, a bidirectional casuality relation is observed between the education and health expenditures and economic growth in the period and country group under discussion. The obtained findings both support the intrinsic growth theories and tally with the empirical studies on the subject. Keywords: Education expenditures, health care expenditure, human capital, economic growth, panel causality. 1. INTRODUCTION Studies on growth in the economics literature are usually divided into two groups. The first one is the Neo-classical growth theory that was dominant until 1980s and it identifies the source of economic growth with technology and increase in population which is considered as external in the model. The Neo-classical growth theories, which take shape depending upon savings, capital-labour and income variables, propound that there will be no long-term discrepancy between countries in terms of level of development. The theories that emerged as alternatives to the Neo-classical theory are called as endogeneous growth theories. Emerging endogeneous growth theories bring forward the idea that endogenous conditions like human capital, foreign trade policies, financial development and public expenditures of a country can affect economic growth. Considering the subject within the frame of endogenous growth theories, it is ascertained that the human capital resources of a country have a great impact on growth. In recent years, the empirical studies on economic growth also increasingly emphasize the role of human capital in economic growth process. As often expressed in the empirical studies, the most important indicators of the human capital are health care and education. For education and health, the number of people graduated from collages and life expectancy at birth or total public expenditure intended on education and health care are used as variables in empirical models. Education and health care expenditures increase the quality of labour force and positively contribute to the production capacity and thus to the economic growth. It is also emphasized by the endogenous growth theories that in the development process, health care and education expenditures play an important role in the formation of human capital and have a significant contribution to the sustainable economic growth in long-term. 1 �3rd International Symposium on Sustainable Development, May 31 - June 01 2012, Sarajevo In this study, within the frame of theoretical and empirical arguments presented above in summary, the relationship between education, health care expenditures and economic growth is tested by the panel causality test for 20 OECD member countries that are selected considering data sufficiency for 1999 – 2008 period. In the first part of the study that composed of three parts, the theoretical frame is presented. After the second part that summarizes the findings of relevant empirical studies, the empirical model and the findings of the model are evaluated. The study reveals the importance of human capital for economic development. 2. EMPIRICAL LITERATURE Empirical literature about the relationship between human capital and economic growth is summarized in Table 1. Table 1: The Empirical Literature Author Method Period Country Result Romer (1989) Endegenous Growth Model 1960-1985 Transnational Positive effect of education on growth Mulligan and Sala-i Martin (1992) Endegenous Growth Model Barro and Lee (1993) Panel Method Kelly (1997) Ordinary Squares Least Rivera and Currais (1998) Ordinary Squares Least Freire-Serén (2001) Two-Step OLS Kar and (2003) Ağır Granger Causality, VECM Economic growth increases the rate of return on human capital 1960-1985 189 Country Positive effect of education on growth 1970-1989 73 Country Do not have any effect on economic growth of health spending 1960-1990 OECD Countries Positive effect of health spending on economic growth 1960-1990 Transnational There are two-way causal relationship between human capital and economic growth -causality of education spending to economic growth 1926-1994 Turkey -causality of economic growth to health spending -Human capital has a positive effect on growth in the long term Serel and Masatçı (2005) Johansen cointegration 1950-2000 Taban (2006) Johansen cointegration, Granger Causality 1968-2003 Turkey Two-way causal relationship between health indicators and economic growth Taban and Kar (2006) Granger Causality 1969-2001 Turkey Two-way causal relationship between educaiton and economic growth Haldar and Mallik (2010) Johansen cointegration, ARDL 1960-2006 India investment in education and health are very important and has a significant positive long run effect on per capita Turkey -Causality of economic growth to human capital 2 �3rd International Symposium on Sustainable Development, May 31 - June 01 2012, Sarajevo GNP growth -Causality of human capital to GDP in the short and long term Şimşek and Kadılar (2010) Cointegraiton, granger causality, ARDL 1960-2004 Keskin (2011) Multiple Linear Regression Cross-Sectional Data 177 Countries Yaylalı and Lebe (2011) Cointegraiton and VAR 1938-2007 Turkey Turkey - Causality of GDP to human capital in the short term BM Has important effects on economic development, educatiton and health spending Two-way causal relationship between educaiton and economic growth 3. MODEL, DATA AND METHODS In this study, the estimated models are shown in the following equations. m n l1 k 1 GDPt   0   l GDPt l    k EGTM t k  ut m n l1 k 1 (1) EGTM t   0   l EGTM t l    k GDPt k  ut m n l1 k 1 (2) GDPt   0   l GDPt l    k SAGLK t k  ut m n l1 k 1 SAGLK t   0   l SAGLK t l    k GDPt k  u t (3) (4) In the model, GDP symbolizes the rate of growth, EGTM symbolizes the GDP ratio of total education expenditures, SAGLK symbolizes the GDP ratio of total health expenditures,  and s symbolize the parameters and m and n symbolize the lag length. According to Schwarz information criterion 3 is determined as the length of delay. Besides, employment (IST) is added as a control variable to the model as it can be in relation to growth, education and health. The data used in the analysis is obtained from World Bank WDI, OECD-STAN data bases. The data set used icludes 1999 – 2008 period and 20 OECD member countries: Austria, Czech Republic, France, Hungary, Ireland, Israel, Italy, Japan, Holland, Spain, UK, Denmark, Germany, Poland, Portugal, Slovakia, Finland, Iceland and USA. According to Holtz-Eakin, Newey and Rosen (1988), the hypothesis test can be made in equation 5 in order to examine whether model in equation 1 cause GDP to EGTM and model in equation 2 EGTM to GDP. This hypothesis test can also be made for equations 3 and 4 that present the relation between GDP and SAGLK. 1   2   3  0 (5) The economics literature suggests three approaches to test casuality in panel data set. The first approach is based on the generalized method of moments (GMM) and the Wald test in equation 3. The GMM method requires the panel data set to be N>T. The second one is suggested by Hurlin (2008) and fixed effects are based on panel data approach. The fixed effect panel data approach can be applied only for static series. The third one is proposed by Kónya (2006) and it is based on the estimates of seemingly unrelated regression (SUR). The 3 �3rd International Symposium on Sustainable Development, May 31 - June 01 2012, Sarajevo last approach requires the panel data set to be T>N. In this study, the GMM - system approach is preferred since the data set used is N>T and some variables in the model are I(1). Holtz-Eakin, Newey and Rosen (1988), Arellano and Bond (1991), Arellano and Bover (1995) and Blundell and Bond (1998) developed the GMM – system approach which can solve the endogeneity and it can be and applied to T<N feature samples. This method is basically an instrumental variable method. It is based on producing instrumental variables which have the similar characteristics of moment instead of variables that are considered to have the problem of endogeneity and using instrumental variables in regression model. It is possible to express GMM β estimator as in equation 6 for a model in the form of yi  xi  ui (Cameron and Triverdi, 2009, p. 175): ̂ GMM   X ZWZ X 1 X ZWZ y (6) In equation 6, X represents the matrix of independent variable, Z represents the matrix instrumental variable, Y represents the matrix of dependent variable and W represents the matrix of symmetric weight. The GMM β estimator minimizes the objective function. The objective function is indicated in equation 7. 1    1 Q(  )    y  X  Z W  Z  y  X  N  N  (7) When the matrix of weight is taken in the quadratic form, it is equal to Z  y  X  . However, when the matrix of weight is selected as in two-staged EKK the optimal GMM estimator is reached. The optimal GMM is indicated in equation 8.  ̂ OGMM  X ZSˆ 1 Z X  1 X ZSˆ 1 Z y   (8) 1 / 2 In the equation 8 Ŝ is the estimation of Var N Z u . The efficiency of the GMM estimator depends on selecting the right matrix of instrumental variable. There are three tests used for this purpose. The first one is the AR(1) and AR(2) tests developed by Arellano and Bond (1991). The AR(1) test examines the null hypothesis in the form of “no first-order autocorrelation.” Because of the method of obtaining instrumental variable, first-order autocorrelation should be observed automatically in the error term of the model and the null hypothesis should be rejected at a %5 statistical significance level. Otherwise, it is understood that the instrumental variables cannot be determined correctly. On the other hand, AR(2) test examines the null hypothesis in the form of “no second-order autocorrelation.” The no second-order autocorrelation should not be rejected at a %5 statistical significance level in the model. Otherwise, it is again understood that the instrumental variables cannot be determined correctly. The second test is known as the Sargan test. It examines the null hypothesis in the form of “instrumental variable is valid.” Therefore, the null hypothesis should not be rejected at a %5 statistical significance level. The last test is known as Hansen’s J test. The J test also examines the null hypothesis in the form of “instrumental variable is valid” and the null hypothesis should not be rejected at a %5 statistical significance level. Furthermore, if the tests are ranked according to the degree of reliability, AR(1) and AR(2) tests are in the first place, the Sargan test is in the second and the J test take the last place. Particularly, as the number of instrumental variables increase the success of the J test decreases (Roodman, 2006, p. 14). Finally, Windmeijer (2005) proved that the GMM estimate is exposed to small sample deviation in a finite number of observations and proposed a method to correct this small 4 �3rd International Symposium on Sustainable Development, May 31 - June 01 2012, Sarajevo sample deviation that emerge in standart errors. Moreover, the author proves that when this deviation arising from the small sample is corrected, the deviations observed in standard errors and coefficients decrease as well. In order to correct the results of the GMM method used in this study, the correction proposed by Windmeijer (2005) is followed. The only code that can implement this correction is written by Roodman (2006). For this reason, the code written by Roodman (2006) is used for GMM estimation. 4. FINDINGS In table 2, the results of the model estimation that examines whether there is a casual relationship from education to growth is shown. Table 2: Estimation Results of Model 1 Independent Variables Coefficient Corrected Standard Error T Statistics Probability GDPt-1 0.67* 0.111 6.05 0.000 EGTM -6.19* 0.980 -6.32 0.000 EGTMt-1 7.72* 1.502 5.14 0.000 EGTMt-2 -0.75 1.471 -0.52 0.607 EGTMt-3 -0.84 0.964 -0.88 0.382 Arellano-Bond AR(1) Statistics -4.21 (0.000) F Statistics 18.56 (0.000)* Arellano-Bond AR(2) Statistics -0.79 (0.429) No. Of Observations 120 Cross-Section 20 Time Dimension 10 years Method Two Staged Panel GMM-system Wald Statistics (EGTMt-1 = EGTMt-2 = EGTMt-3 = 0) 10.94 (0.0071) Note: * symbol shows the %1 statistically significant coefficients. In the statistics related to the model, the values before the parentheses show the related statistic values and the values in parentheses indicate the possibilities. According to the findings, the F statistics show that the model, as a whole, is statistically significant at a %5 significance level. The AR(1) statistics show first-order autocorrelation is observed in the error terms of the model and AR(2) statistics show no second-order autocorrelation. The Wald statistics that examine EGTMt-1 = EGTMt-2 = EGTMt-3 = 0 hyphothesis is rejected at a significance level of %1. This finding means that the education expenditures are the reasons of growth. In table 3, the results of the model estimation that examines whether there is a casual relationship from growth to education expenditures is shown. Table 3: Estimation Results of Model 2 Independent Variables Coefficient Corrected Standard Error T Statistics Probability EGTMt-1 0.954* 0.038 25.03 0.000 GDP -0.041* 0.009 -4.28 0.000 5 �3rd International Symposium on Sustainable Development, May 31 - June 01 2012, Sarajevo GDPt-1 0.015 0.65 0.515 0.015 2.20 0.030 0.012 0.56 0.577 Arellano-Bond AR(1) Statistics -4.48 (0.000) F Statistics 165.54 (0.000)* Arellano-Bond AR(2) Statistics 0.56 (0.577) GDPt-2 GDPt-3 0.010 0.034** 0.006 Wald Statistics (GDPt-1 = GDPt-2 = GDPt-3 = 0) 10.49 (0.0071) No. Observations Of 120 Cross-Section 20 Time Dimension 10 years Method Two-Staged GMM-system Panel Note: * symbol shows %1 ** shows %5 statistically significant coefficients. In the statistics related to the model, the values before the parentheses show the related statistic values and the values in parentheses indicate the possibilities. According to the no. 2 model estimation results, the model is significant at a %1 significance level and the instrumental variables are valid. Besides, the Wald statistics cannot reject the H0 hypothesis at %1, %5 and %10 significance levels in the form of growth is not the reason of education expenditures. In table 4, there are the results of a casual relationship research from health expenditures to growth that is stated above in no. 3 model. Table 4: Estimation Results of Model 3 Independent Variables Coefficient Corrected Standard Error T Statistics Probability GDPt-1 0.462* 0.131 3.52 0.001 SAGLK -5.529* 0.732 -7.55 0.000 SAGLKt-1 6.072* 1.260 4.82 0.000 SAGLKt-2 -0.674 1.292 -0.52 0.603 SAGLKt-3 -0.467 0.824 -0.57 0.572 Arellano-Bond AR(1) Statistics -4.20 (0.000) F Statistics 24.09 (0.000)* Arellano-Bond AR(2) Statistics -0.65 (0.513) No. Observations Wald Statistics (SAGLKt-1 = SAGLKt-2 = SAGLKt-3 = 0) 17.05 (0.0000) Of 120 Cross-Section 20 Time Dimension 10 years Method Two-Staged GMM-system Panel Note: * symbol shows %1 ** shows %5 statistically significant coefficients. In the statistics related to the model, the values before the parentheses show the related statistic values and the values in parentheses indicate the possibilities. According to the no. 3 model estimation results, the model is significant at a %1 significance level and the instrumental variables are valid. Besides, the Wald statistics cannot reject the H0 hypothesis at %1, %5 and %10 significance levels in the form of growth is not the reason of health expenditures. 6 �3rd International Symposium on Sustainable Development, May 31 - June 01 2012, Sarajevo In table 5, there are the results of a casual relationship research from growth to health expenditures that is stated above in equation 4. Table 5: Estimation Results of Model 4 Independent Variables Coefficient Corrected Standard Error T Statistics Probability SAGLKt-1 0.928 0.257 36.06 0.000 GDP -0.769 0.013 -5.84 0.000 GDPt-1 -0.005 0.020 -0.25 0.805 GDPt-2 0.009 0.021 0.46 0.645 GDPt-3 0.040 0.015 2.56 0.012 Arellano-Bond AR(1) Statistics -3.57 (0.000) F Statistics 527.27(0.000)* Arellano-Bond AR(2) Statistics -0.18 (0.860) No. Observations Wald Statistics (GDPt-1 = GDPt-2 = GDPt-3 = 0) 18.06 (0.0000) Of 120 Cross-Section 20 Time Dimension 10 years Method Two-Staged GMM-system Panel Note: * symbol shows %1 ** shows %5 statistically significant coefficients. In the statistics related to the model, the values before the parentheses show the related statistic values and the values in parentheses indicate the possibilities. According to results of no.4 model estimation results that is summarized in table 5, the model is significant at a %1 significance level and the instrumental variables are valid. Besides, the Wald statistics accept the that there is a casual relationship from growth to health expenditures at %1significance level . 5. CONCLUSION In this study the nexus between human capital and economic growth was tested empirically using panel causality test for 20 OECD countries. Achieved evidence indicates that there are bi-directional causal relationship between education expenses and economic growth. Furthermore two-sided causal relationship between health expenses and economic growth was found. These findings support the suggestion of endogenous growth theory which is a competitor of Neo classical growth theory. REFERENCES Arellano, M. and Bond, S. (1991) Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment, The Review of Economic Studies, 58(2), 277297. Arellano, M. and Bover, O.(1995) Another Look at the Instrumental Variable Estimation of Error-components Models, Journal of Econometrics, 68, 29-51. Barro, R. J. and Lee J. W. (1993) International Comparisons of Educational Attainment, NBER Working Paper Series, WP No: 4349. Blundell, R. W. and Bond, S. (1998) Initial Conditions and Moment Restrictions in Dynamic Panel Data Models, Journal of Econometrics, 87, 115-143. 7 �3rd International Symposium on Sustainable Development, May 31 - June 01 2012, Sarajevo Cameron, A. C. and Trivedi, P. K. (2009) Microeconometrics Using Stata, Stata Pres, Texas. Freire-Seren, M. J. (2001) Human Capital Accumulation and Economic Growth, Investigaciones Economicas, Vol. XXV (3), 585-602. Haldar, S. K. and Mallik, G. (2010), Does Human Capital Cause Economic Growth? A Case Study of India, International Journal of Economic Sciences and Applied Research, 3 (1): 7-25. Holtz-Eakin, D., Newey, W. and H. Rosen (1988) Estimating Vector Autoregressions with Panel Data, Econometrica, Vol 56, 1371-1395. Hurlin, C. (2008) Testing for Granger Non-causality in Heterogeneous Panels, Hyper Articles en Ligne Sciences de I'Homme et Société, http://halshs.archivesouvertes.fr/docs/00/22/44/34/PDF/Causality_WP.pdf. Kar, M. and Ağır, H. (2003) Türkiye’de Beseri Sermaye ve Ekonomik Büyüme: Nedensellik Testi, II. Ulusal Bilgi, Ekonomi ve Yönetim Kongresi Bildiriler Kitabı, (Derbent- Izmir), 181190. Kelly, Trish (1997) Public expenditures and growth, Journal of Development Studies, 34:1, 60-84. Keskin, Abdullah (2011) Ekonomik Kalkınmada Beşeri Sermayenin Rolü ve Türkiye, Atatürk Üniversitesi İktisadi ve İdari Bilimler Dergisi, Cilt: 25, Sayı: 3-4, 125-153. Konya, L. (2006) Exports and Growth: Granger Causality Analysis on OECD Countries with a Panel Data Approach, Economic Modelling, Vol. 23, No. 6, 978–992. Mulligan C. B. and Sala-i-Martin, X. (1992) Transitional Dynamics in Two-Sector Models of Endogenous Growth, NBER Working Paper Series, WP No:3986. Rivera, B. and Currais, L. (1999) Economic growth and health: direct impact or reverse causation?, Applied Economics Letters, 6:11, 761-764. Romer, P.M. (1989) Human Capital and Growth: Theory and Evidence, NBER Working Paper Series, WP No:3173. Roodman, D. (2006) How to Do xtabond2: An Introduction to “Difference” and “System” GMM in Stata, The Center for Global Development Working Paper Series, No. 103. Serel, H. and Masatçı K. (2005) Türkiye’de Beşeri Sermaye ve İktisadi Büyüme İlişkisi: KoEntegrasyon Analizi, Atatürk Üniversitesi İktisadi ve İdari Bilimler Dergisi, Cilt: 19, Sayı: 2, 49-58. Şimşek M. and Kadılar, C. (2010) Türkiye’de Beşeri Sermaye, İhracat ve Ekonomik Büyüme Arasındaki İlişkinin Nedensellik Analizi, C.Ü. İktisadi ve İdari Bilimler Dergisi, Cilt 11, Sayı 1,115-140. Taban, S. and Kar, M. (2006) Beşeri Sermaye ve Ekonomik Büyüme: Nedensellik Analizi: 1969-2001, Anadolu Üniversitesi Soyal Bilimler Dergisi, Cilt:6 Sayı:1, 159-181. Taban, S. (2006) Türkiye’de Sağlık ve Ekonomik Büyüme Arasındaki Nedensellik İlişkisi, Sosyoekonomi, Temmuz-Aralık 2006-2, 31-46. Windmeijer, F. (2005) A Finite Sample Correction for the Variance of Linear Efficient Twostep GMM Estimators, Journal of Econometrics, Vol 126, 25-51. Yaylalı, M. and Lebe, F. (2011) Beşeri sermaye İle İktisadi Büyüme Arasındaki İlişkinin Ampirik Analizi, Marmara Üniversitesi İİBF Dergisi, Cilt XXX, Sayı I, 23-51. 8 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1306 Title A name given to the resource Relationship Between Human Capital And Economic Growth: Panel Causality Analysis For Selected Oecd Countries Author Author Ferdi , Kesikoğlu Abstract A summary of the resource. In this study, the relation between education and health expenditures that are accepted as an indicator of human capital and economic growth is tested empirically. According to the findings of the study, based on 1999 – 2008 period for 20 OECD countries that are selected by the panel casuality test, a bidirectional casuality relation is observed between the education and health expenditures and economic growth in the period and country group under discussion. The obtained findings both support the intrinsic growth theories and tally with the empirical studies on the subject. Keywords: Education expenditures, health care expenditure, human capital, economic growth, panel causality. Date A point or period of time associated with an event in the lifecycle of the resource 2012-05-31 Keywords Keywords. Conference or Workshop Item PeerReviewed H Social Sciences (General),HB Economic Theory,HG Finance,HJ Public Finance https://omeka.ibu.edu.ba/files/original/3c3be5b7ac01d6060481a64ad11e3e30.pdf 70f7ebf4094240f6fd08dcb29f861b0a PDF Text Text International Conference on Economic and Social Studies, 10-11 May, 2013, Sarajevo Relationship between Machiavelism and Ethical Leadership and an Application Mustafa Kemal Demirci Dumlupınar University, Kütahya, Turkey mkdemirci26@hotmail.com Gülten Eren Gümüştekin Dumlupınar University, Kütahya, Turkey ggumustekin@hotmail.com Nuray Mercan Dumlupınar University, Kütahya, Turkey snmmercan@yahoo.com Bayram Alamur Balıkesir University, Balıkesir, Turkey alamur_bayram@hotmail.com Süleyman Tiryaki Dumlupınar University, Kütahya, Turkey tiryaks06@hotmail.com Machiavelli has emphasized and defended to the brutality of competition, which happens in both political and organizational life, selfishness and has taken account of the fact that the every unethical way can be try to reach the purpose. 21. Century is the information age. Besides, different management models and leadership characteristics have discussed in this age as well. In recent years, the scandals which emerged in businesses Enron, WorldCom, Parmalat etc. have caused to become importance for the ethical behavior of leaders and began to be questioned the role of leader in formation of ethical behavior. Ethical leadership is the integration of ethic and leadership, and is an example for employees. Ethical leadership shows the way to the employees to reach the goals, it is the way which has only ethical principles and methods. The purpose of this resource is to determine the level of Machiavellian tendencies and to determine its statistical relationship between the ethical leadership. The resource questionnaire method was applied to 127 teachers who work in Altintas. As a result of this resource teachers’ average score was calculated 90, 9. The high and low limit that separating of Machiavellian behavior is 100 point. 18, 8% of teachers has been received high Machiavellian behavior score. Positive correlation was found between negative tendency to the Machiavellism and ethical leadership. In this resource are not differences between the perspectives to ethical leadership and the Machiavellian level of men and women. Keywords: Machiavelism, Ethical Leadership. 215 � https://omeka.ibu.edu.ba/files/original/08d19d7d3c69941850a509f4c6e52fa3.docx 620e6e13c5f78a32ab50682e8371b8c0 https://omeka.ibu.edu.ba/files/original/f7dca47b304a3aae03fa21df870a0e3f.pdf 18362bc52a69759df79a7d697368fb9a PDF Text Text International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Machiavellianism in Relation to Ethical Leadership and a Practice Mustafa Kemal Demirci Dumlupınar University,Kütahya, Turkey mkdemirci26@hotmail.com Gülten Eren Gümüştekin Dumlupınar University,Kütahya, Turkey ggumustekin@hotmail.com Nuray Mercan Dumlupınar University,Kütahya, Turkey snmmercan@yahoo.com Bayram Alamur Balıkesir University, Balıkesir, Turkey alamur_bayram@hotmail.com Süleyman Tiryaki Dumlupınar University,Kütahya, Turkey tiryaks06@hotmail.com Abstract Machiavelli emphasized and asserted the idea that any unethical way to fulfill a goal can be put into practice as well as ruthlessness of rivalry and selfishness both in political and organizational life. The 21st century is a period in which a variety of management models and leadership qualifications has been discussed besides being information age. At the heart of these discussions, recent business scandals such as Enron, WorldCom, Parmalat etc. paved the way for leadership behavior to gain importance and the role of leader modeling the “ethical behavior” has begun to be argued. Ethical leadership is the integration of ethics and leadership issues as well as serving to the employees as a model. Ethical leadership is to enable the employees only with the ethical principles and procedures on the way to achieve their aims. The objective of this research is to determine the levels of Machiavellianist tendencies and relationship with ethical leadership statistically. A survey method has been applied to 127 teachers working in Altıntaş. According to survey results, the average score of the teachers included is 90,9 points. The boundary line separating high and low Machiavellianist attitude is 100 points. It has been seen that 18,8 % of the teachers scored points of high Machiavellianist attitude. It has been confirmed by the results that there is a positive correlation between negative Machiavellianist tendency and ethical leadership. There is no difference determined between Machiavellianist levels and ethical leadership perspectives of men and women. Key words: Machiavellianism, Ethical Leadership Introduction Theoretically, Machiavellianism, including alienation from the influence of interpersonal relationships and indifference to traditional ethical values, is to reach individual targets by manipulating persons. 1 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo In cases of collaboration, Machiavellianists share information, however in highly competitive environments; they keep the information to their selves. Generally, the concepts of Machiavellianism and ethics are regarded as two poles of an axis. It can be said that this is based upon Machiavelli’s notion : “If an administrator seeks to realize an ambition, being ethical shall not always be found rational, on the contrary the whole consistent attempts providing social approval of people, shall be seen as irrational policy”. (Skinner 2002: 60). Machiavellianism is among the basic personality traits which affect the organizational behavior. The belief of experimenting any way to fulfill the objective turns these individuals into more Machiavellianist ones in cases of negotiation necessity with less rules. In their book “ Studies in Machiavellianism” published in 1970, Richard Christie and Florence Geis , who developed a psychometric scale, with reference to Machiavelli’s notions, to scale Machiavellianist attitude, described the qualifications of Machavellianists with high tendencies and low tendencies as follows : Individuals with high Machiavellianist tendencies are described as target-oriented, coldblooded, objectiveminded, cheater, team leader, a good handler of interaction with all process, manager, power-oriented, authoritative, not open to manipulations, skeptical, not trustworthy, success-oriented, selfish, opportunist, judicial, arrogant, aggressive, limit-pusher, performance-oriented rather than justice-oriented. On the other hand, individuals with low Machiavellianist tendencies are described as not confident, inclined to be managed and dominated easily, sympathizer and sympathetic, friendly, sensible, prone to collaboration, self-sacrificing, thoughtful and with ethical values (Ergeneli, 2006). The concept of ethical leadership shapes the attitudes of people in many fields of communal living. Besides some qualifications such as truthfulness and honesty, ethical leadership features the concept of psychic leadership concentrating on values. The values such as loyalty, truthfulness or vice versa can be seen as a part of ethical leadership values (Plinio, 2009:278). Harvey, as a result of researches on ethical leadership, introduced the ten-item ethical leadership (Harvey, 2004:23): 1. Ethical leaders regularly make reference to common values, business principles and ethical standards and ensure that they are understood, supported and adopted. 2. Ethical leaders hold themselves and other people responsible for behaving in accordance with ethical values. 3. Since ethical leaders speak and act with integrity, they have the right to expect the others to do so. 4. Ethical leaders take into consideration others and guiding principles at the decision making stages. They manifest their values in all their deeds. 5. Ethical Leaders take pains so that policies and practices are in harmony. 6. Ethical leaders allocate time and resources to help people acquire confidence and skills that are required to transform correct beliefs into good behavior. 7. Ethical leaders attach importance to the feelings, views and reactions of their colleagues, employees and all the others who fall in their sphere of influence. 8. Ethical leaders make large numbers of small improvements in many fields. They easily adapt to ethical values and rules thanks to their sophistication. 9. While they are making decisions about choosing and promoting people who they will work with, ethical leaders use their mission, vision and values as criteria. 10. Ethical leaders motivate followers to take initiative and act as guides rather than making complaints, accusing some others, or waiting for others to take lead. 2 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo In the first part of this research, the relationship between Machiavellianism and ethical leadership, literature search as the second part and research findings and analysis as the conclusion part will take place. The Relationship between Machiavellianism and Ethical Leadership According to the results of a survey relating to ethical perception difference between Machiavellianist individuals in comparison with the others, those ,who have high ethical perceptions, have less Machiavellianist tendencies compared to the ones who have low ethical perceptions. For Christie and Geis, social pressure affects highly Machiavellianist individuals less, thus these individuals obey the social norms less than the others (Skinner 2002: 60). Moreover, Christie and Geis stated that Machiavellianist individuals are deprived of the concept of traditional ethics and in their perspectives of seeing the individuals, they are pragmatist. According to them these individuals are not deprived of ethics, yet they abide by some ethical principles which are not in accordance with traditional ethics. Furthermore, Mahciavellianist leaders can be exceptionally successful and useful in terms of the other organizations in cases of negotiation and persuasive skills are required. As a matter of fact, Machiavellianist individuals are exceptionally good at developing competitive strategies to succeed by concentrating on cognitive analysis of the cases. However, it is the best way for the business organizations to keep the Machiavellianist perspective limited. Thus; not only achievement motivation, the motive power and being aim-oriented can be preserved, but also the opportunist, selfish and deceitful sides of Machiavellianists can be prevented. (Mandacı, 2007: 54). Highly Machiavellianists think first and act accordingly while lowly Machiavellianists act first and then shape their cognition. Although Machiavellianism is not directly associated with any general intelligence testing scale, highly Machiavellianists are found out to be smarter and more charming compared to the lowly Machiavellianists. (Ural, 2003: 102). Literature Review According to Atakan (2002), mass media news programs cannot reach any difference in business levels among different age groups. The profession of a doctor is another occupation which has been searched in terms of the relationship with Machiavellianism. By using average score of Mach IV Scale, Bakır (1992) found out that the more age and term of office increases , career status progresses or academic title is gained, the more positive social values become and the less the tendency of looking out own profits becomes. In his research, Bakır (1993) carried out a survey among the students of Gulhane Military Medical Academy. According to survey results, once the students are closer to complete their education, Mach IV scores significantly increase, marital status affects social values and married doctors have less Machiavellianist tendencies. As for Abdul Aziz (2004), there has been found out a strong positive relationship between Machiavellianism and absenteeism. Abdul Aziz found out that part-time employees have higher Machiavellianism levels compared to full-time employees. In her studies in banking sector Mandacı (2007) found out that there is not a difference between marriedsingle,experienced or age groups in terms of Machiavellianism and ethical perception. Although marital status andage changes, Machiavellianist features including more individualistic attitudes are not shown. Research results show that there is not a significant difference between private and public sectors in terms of Machiavellianism and ethical perception levels. Tekin (2008) found out that Machiavellianist notions are common 3 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo among sales representatives and such attitudes as favoring some clients, not granting a discount of credit sales, dealing with personal issues during work hours, tolerating nonobeyers of ethical rules, increasing prices for foreigners, exploiting the organization’s equipment’s, forcing the clients to purchase the item are Machiavellianist features. Arslan (2004), in her research attended by 403 adults living in Ankara, Istanbul, Izmir and Mersin, found out that there is not a significant relationship between sex and Machiavellianism, there is a positive relationship between Machiavellianism and high level of alienation, as well as a negative relationship between his level of education and Machiavellianism. Bakır (2003) searched out that there is a negative relationship between Machiavellianism and job satisfaction in a survey among doctors. Jelinek (1985), in a research for students, reached the results that those who have had high scores of Machiavellianism are less stressful than the ones who have not. Barlow (2010) in a research aimed at students, found out that there is a negative relationship between Machiavellianism and emotional intelligence and that female students are less Machiavellianist in comparison to male students as female students are prone to use their emotions more. Paulhus, in a research aimed at employees about Machiavellianism and five-factor personality, found out a positive relationship between Machiavellianism and narcissism; and a negative one between Machiavellianism and psychopathic personality. Paul and Bereczki (2007), in a research aimed at employees, found out that there is a negative relationship between Machiavellianism and social co-operationRayburn (2003), in a research aimed at employees, found out that there is a positive relationship between Machiavellianism, Type A personality and academic success, and a negative one between ethical perception, Type A personality and academic success. Liu (2008), in a research aimed at employees, found out that there is a negative relationship between Machiavellianism and information sharing. Latif (2000) searched out that there is a negative relationship between Machiavellianism and ethical perception. Cyriac and Dharmaraj (1994) analyzed Indian businessmen in detail in terms of Machiavellianism levels and found out that administrators working in large cities of India have been affected by Machiavellianism as the ones in most European countries. Moreove, in a research carried out in China; although negative relationship between Machiavellianism levels and job satisfaction has been uttered in literature, Siu (1998) stated that the more Machiavellianism levels of bankers working in Hong Kong increase, the more satisfaction they get. Corzione and Buntzman (1999), in their research to analyze the Machiavellianism levels of employees in American Banks, found out that Machiavellianism levels do not differ intersexual. They also found that there is not a significant difference between the Machiavellianism levels of American banks and Hong Kong Banks. Also, they could not find any relationship between Machavellianism and salary. The Objective and Importance of the Research The objective of the research is to examine the relationship between ethical leadership and Machiavellianist features and attitudes which are effective on people to behave unethically. Research Method,Sampling and Data Collection Tools The research will be carried out by method of survey to the employees of Kutahya Altintas Distcirct Governorship. The data of research has been provided by surveys based on the literature. 4 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo As a data collection tool, survey form has been used. On this form,respectively demographic information and 20-items about Machiavellianist personality take part. While preparing the survey form, Mach IV version developed by Christie and Geis to scale Machiavellianist personality, has been used. 20 items of Mach IV Scale have been adapted to Turkish. Half of the items reflect Machiavellianist personality (positive) whereas the other half is against Machiavellianist personality (negative). Positive items are respectively as follows: (1, 3,4, 6,7, 9, 12, 16, 18, 19), and the negative items are as follows : (2, 5, 8, 10,11, 13,14,15,17, 20). These items take part in five-Likert type scale on the survey form. On the form 5-point represents “strongly agree”, 1-point represents “strongly disagree”. Machiavellianist Personality Score = Total Positive Points -Total Negative Points + 100 It is known by the researcher which of the questions is positive and negative. On this survey high score shows highly Machiavellianist personality and low score shows lowly Machiavellianist personality. By determining 100 points as criteria, over 100 points showing high, below 100 showing low Machiavellianist personality is determined as the standard. Ethical Leadership Scale is a scale developed on social learning theory grounds. There are 10 items about ethical leadership (Tuna vd. 2012). Hypotheses ofthe Research The hypotheses of this research are mentioned as follows: H1: There is not a statistically significant relationship between the levels of Machiavellianism and sex factor of the teachers who have taken the survey. H2: There is a statistically significant relationship between the levels of negative tendency to Machiavellianism and ethical leadership perceptions of the teachers who have taken the survey. H3: There is not a statistically significant difference between the negative and positive perceptions of Machiavellianism and ethical leadership perceptions of the teachers who have taken the survey. Findings and Analysis In this part, the data of the teachers, which have been participated, collected by means of survey method, necessary statistical processes to work out sub-problems and comments are included 1 Survey Reliability Table-1: Internal Consistency of Surveys Scale Positive Machiavellianism Item Scale Negative Machiavellianism Item Scale ETHICAL LEADERSHIP SCALE Number of Items 10 Cronbach‟s Alpha 0,782 10 0,732 10 0,796 5 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Having analyzed the reliability of answers given to Machiavellianism Scale by academicians participated, reliability coefficient is r= 0,832. Ethical Leadership has been proved to have r= 0, 70 reliability coefficient. Table 2. Arithmetic Mean, Standard Deviation and Factor Load Values POSITIVE ITEMS ABOUT MACHIAVELLIANISM 1. The best way to handle people is to tell them what they want to hear. 3. Anyone who completely trusts anyone else is asking for trouble. 4. It is hard to get ahead without cutting corners here and there. 6. It is safest to assume that all people have a vicious streak and it will come out when they are given a chance. 7. Never tell anyone the real reason you did something unless it is useful to do so. 9. It is wise to flatter important people. 12.People suffering from incurable diseases should have the choice of being put painlessly to death. 16.Most people forget more easily the death of a parent than the loss of their property. 18.Generally speaking, people won’t work hard unless they’re forced to do so. 19.The biggest difference between most criminals and other people is that criminals are stupid enough to get caught. NEGATIVE ITMES ABOUT MACHIAVELLIANISM 2. When you ask someone to do something for you, it is best to give the real reasons for wanting it rather than giving reasons which might carry more weight. 5. Honesty is the best policy in all cases. 8. One should take action only when sure it is morally right. 10. All in all, it is better to be humble and honest than to be important and dishonest. 11. Barnum was very wrong when he said there’s a sucker born every minute. 13. It is possible to be good in all respects. 14. Most people are basically good and kind. 15. There is no excuse for lying to someone else. 17. Most people who get ahead in the world lead clean moral lives. 20. Most people are brave. ETHIC LIDER 1. My manager listens to what employees have to say 2. My manager disciplines employees who violate ethical standards. 3. My manager conducts his/her personal life in an ethical manner 4. My manager has the best interests of employees in mind 5. My manager makes fair and balanced decisions 6. My manager can be trusted 7. My manager discusses business ethics or values with employees 8. My manager sets an example of how to do things the right way in terms of ethics 9. My manager defines success not just by results but also the way that they are obtained 10. My manager when making decisions, asks “what is the right thing to do?” Arithmetic Mean Standard Deviation ALPHA VALUE 3,24 3,23 3,85 3,47 1,348 1,340 1,241 1,174 ,715 ,703 ,739 ,721 2,98 1,472 ,784 1,96 2,35 1,353 1,504 ,781 ,740 2,95 1,356 ,734 3,01 1,312 ,731 2,56 1,395 ,787 4,43 ,905 ,685 4,58 4,38 4,28 ,849 ,854 1,046 ,793 ,729 ,771 4,14 1,014 ,694 3,72 3,80 4,07 3,11 3,50 ,997 ,937 ,961 1,370 1,221 ,671 ,690 ,784 ,751 ,687 4,02 3,80 4,23 4,23 4,27 4,39 4,35 4,24 1,000 1,115 ,977 ,875 ,791 ,768 ,802 ,742 ,774 ,819 ,774 ,764 ,766 ,772 ,783 ,781 4,31 ,684 ,777 4,39 ,691 ,770 Cronbach Alpha Coefficient is referred to test the inter-consistency of the scale item in scope of Machiavellianism Scale and reliability study, and test-retest reliability coefficients are referred to test the time consistency in terms of scaled quality. The internal consistency 6 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo coefficient related to 20-items of the scale α=.7320 olarak hesaplanmıştır. The internal consistency coefficient related to 10 item Ethical Leadership Scale is α=.796. In the literature, internal consistency values over .70 are suitable. Table-3 Demographic Variables AGE VARIABLE AGE FREQUEN CY 20-25 29 26-30 55 31-35 26 36-40 9 41-45 3 46 AND OVER TOTAL SEX MALE FEMALE % 22,8 43,3 20,5 7,1 2,4 5 3,9 127 100,0 106 122 46,5 53,5 TERM OF SERVICE 1-5 95 YEARS 5-10 23 YEARS 10-15 6 YEARS 15-20 2 YEARS OVER 20 1 YEARS TOTAL 127 74,8 18,1 4,7 MARITAL STATUS FREQUENC Y MARRIED 68 SINGLE 59 TOTAL 127 JOB POSITION KINDERGAR 8 TEN TEACHER CLASS 92 MASTER DIRECTOR24 VICE DIR. CLERK 3 TOTAL 127 EDU. LEVEL HIGH SCH. UNIVERSIT Y MASTER’S DEGR. TOTAL % 53,5 46,5 100,0 6,3 72,4 18,9 2,4 100,0 6 117 4,7 92,1 4 3,1 127 100 1,6 ,8 100,0 Analyses of Research Table 4: Average Scores of Machiavellianism Levels of Participants LEVELS MACHIAVEL LIANIST LEVELS N 127 Min. 69 Max. 122 Ave.. 90,9 S.s 9,983 According to Table-4, regarding the scores got by participants, it can be seen that the minimum average score is 69 and maximum average score is 122. Accordingly the average score of the teachers appears to be 90, 9. 7 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Table 5: Perspectives of Females and Males in Terms of Machiavellism and Ethical Leadership NEGATIVE TENDENCY TO MACHIAVELLIANISM POSITIVE TENDENCY TO MACHIAVELLIANISM ETHICAL LEADERSHIP SEX N T P 53 74 ARITHMETIC MEAN 40,4906 39,6757 FEMALE MALE 1091 289 FEMALE MALE 53 74 42,5094 42,0135 ,541 ,580 FEMALE MALE 53 74 29,5283 29,6486 ,125 ,920 As the result of t-test to determine whether there is a significant difference between the scores of females and males about their negative and positive tendencies to Machiavellianism as well as ethical leadership, the difference between the arithmetic means of the groups has not been found statistically significant. Table6: The Perspectives of Higly/Lowly Machiavellianists into Ethical Leadership LEVELS HIGHLY MACHIAVELLIANISTS LOWLY MACHIAVELLIANISTS N 1,00 X 24 ss 41,5833 2,00 103 42,3689 t p ,021 ,886 Table7: Correlation Analysis Determining the Difference between Negative/Positive Tendency To Machiavellianism, Ethical Leadership And Marital Status VARIABLES POSITIVE TENDENCY TO MACHIAVE LLIANISM NEGATIVE TENDENCY TO MACHIAVE LLIANISM ETHICAL LEADERSHIP Pearson Correlat ion 0,037 Sig. (2tailed) Pearson Correlat ion ,682 0,280** Sig. (2tailed ,001 Viewing Table-7, as a result of correlation analysis to determine the relationship between positive tendency to Machiavellianism and ethical leadership , no statistically significant relationship between the scores has been worked out (r= 0, 037 ; p>.05). As a result of correlation analysis to determine the relationship between negative tendency to Machiavellianism and ethical leadership , a low level of statistically significant relationship between the scores has been worked out (r= ,154; p<.05). 8 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Conclusion Regarding the scores got by participants, it can be seen that the minimum average score is 69 and maximum average score is 122. Accordingly the average score of the teachers appears to be 90, 9. Yıldız (1998) found out that the average Machiavellianist tendency score of Turkish administrators is 94. 35, which is not too low taking the boundary line score 100 separating high and low Machiavellianist level into consideration. When examining the percentages of participants’ Machiavellianist tendency levels, it can be seen that 18,8 % of the teachers scored high Machiavellianist tendency levels. Kavak (2001), in her research, found out the country-wide level of Machiavellianist attitude as 97.13 (center 100 point). In this research, 100 points as center, the Machiavellinist levels of individuals in public sector is approximately 86, in private sector approximately 85. Kavak’s (1999) research shows that the level of Machiavellism in Turkey is higher than America (84,5), and lower than Australia (98. 6) which is valid also fort his research. In this research it has been showed that the perspectives of those who have scored high/low Machiavellianism levels do not differ in ethical leadership. This conclusion indicates that Machiavellianist attitude is personalized and even if a person does not behave ethically, he/she expects ethical attitudes from the others. In this research, the conclusion of previous researches indicating females are fewer Machiavellianist could not be reached. 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Barlow Alexandra- Qualter-Stylıanou Maria (2010). “Relationships Between Machiavellianism, Emotional Intelligence And Theory Of Mind İn Children”Personality And Individual Differences,Vol. 48, Issue 1, Pp. 78-82. Corzıone, Janice C Buntzman, Gabriel F. Busch Edgar T.(1999). “Machiavellianism İn U.S.Bankers” TheJournal Of Organisational Analysis, Vol.7, Pp. 72-83. 9 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Cyrıac K. Joseph Dharmaraj Raja (1994). “Machiavellianism İn Indian Management” Journal Of Business Ethics, Vol. 13, Pp. 281-280. Ergeneli, Azize (2006) “Örgüt Ve İnsan” Hacettepe Üniversitesi Yayınları, Hacettepe Üniversitesi Hastaneleri Basımevi, Ankara. Harvey, Eric, (2004), “Liderlik Ve Etik”, Executive Excellence. Yıl:8, Sayı:87, S. 23 Kavak, Bahtışen. (1999). “Makyavelizm İle Tüketicinin Ahlaki Yargıları Arasındaki İlişkiye Yönelik Amprik Bir İnceleme” Ev Ekonomisi Dergisi. Latıf David A. 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Paal Tunde, Bereczkeı Tamas (2007). “Adult Theory Of Mind, Cooperation, Machiavellianism: The Effect Of Mindreading On Social Relations” Personality And Individual Differences, Vol. 43 , Pp. 541–551. Plınıo, Alex J., (2009), “Ethics And Leadership”, International Journal Of Disclosure And Governance, Vol:6, No:4, S. 277-283 Rayburn Mike- Overby John- Hammond Kevin (2003). “Differences İn Charisma, Ethics,Personality, And MachiavellianCharacteristics Of Male And FemaleMarketing Students” Academy Of Marketing Studies Journal, Vol. 7, No. 2, Pp. 107-125. Skınner, Quentin (2002). “Düşüncenin Ustaları: Machiavelli” Türkçesi: Cemal Atilla AltınKitaplar Yayınevi İstanbul. Sıu ,Wai-Sum (1998). “Machiavellianism And Retail Banking Executives İn Hong Kong” 10 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Journal Of Managerial Psychology ,Vol. 13:28. Ural, Tülin. İşletme Ve Pazarlama Etiği. Ankara: Detay Yayınları, 2003. Tekin Zeliha (2008).“Pazarlama Etiğinde Makyavelizm Ve İstanbulMahmutpaşa’da Bir Uygulama” Üniversitesi Sosyal Bilimler Enstitüsü İşletme Anabilim Dalı İşletme Programı, Yüksek Lisans Tezi, İstanbul. Tuna Muharrem, Bircan Hüdaverdi,Yeşiltaş Murat (2012) “Etik Liderlik Ölçeği’nin Geçerlilik Ve Güvenilirlik Çalışması: Antalya Örneği” Atatürk Üniversitesi İktisadi Ve İdari Bilimler Dergisi, Cilt: 26, Sayı: 2. Yıldız Gültekin- Erdoğmuş Nihat (1998).”Toplulukçu Kültürde Makyavelist Davranış Ve Bir Uygulama” Siyasette Ve Yönetiminde Etik. Adapazarı. Www.Nihaterdogmus.Com/.../6toplulukau-Kaoeltaoerde-Makyavelast-DavraniazVe-Bar-Uygulama1.Doc 11 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1632 Title A name given to the resource Relationship between Machiavelism and Ethical Leadership and an Application Author Author KEMAL DEMIRCI, Mustafa EREN GUMUSTEKIN, Gulten MERCAN, Nuray ALAMUR, Bayram TIRYAKI, Suleyman Abstract A summary of the resource. Machiavelli has emphasized and defended to the brutality of competition, which happens in both political and organizational life, selfishness and has taken account of the fact that the every unethical way can be try to reach the purpose. 21. Century is the information age. Besides, different management models and leadership characteristics have discussed in this age as well. In recent years, the scandals which emerged in businesses Enron, WorldCom, Parmalat etc. have caused to become importance for the ethical behavior of leaders and began to be questioned the role of leader in formation of ethical behavior. Ethical leadership is the integration of ethic and leadership, and is an example for employees. Ethical leadership shows the way to the employees to reach the goals, it is the way which has only ethical principles and methods. The purpose of this resource is to determine the level of Machiavellian tendencies and to determine its statistical relationship between the ethical leadership. The resource questionnaire method was applied to 127 teachers who work in Altintas. As a result of this resource teachers’ average score was calculated 90, 9. The high and low limit that separating of Machiavellian behavior is 100 point. 18, 8% of teachers has been received high Machiavellian behavior score. Positive correlation was found between negative tendency to the Machiavellism and ethical leadership. In this resource are not differences between the perspectives to ethical leadership and the Machiavellian level of men and women. Keywords: Machiavelism, Ethical Leadership. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2013-05-10 Keywords Keywords. Article PeerReviewed Identifier An unambiguous reference to the resource within a given context ISSN 978-9958-834-23-3 https://omeka.ibu.edu.ba/files/original/a9d7b5bafadf581bc65a27d385a9507d.pdf ffca1e5369851d455465038f382c5bb3 PDF Text Text Journal of Education and Humanities Volume 3 (1), pp. 3-17, Summer 2020 Original research paper ISSN 2566-4638 © International Burch University https://dx.doi.org/10.14706/JEH2020311 Relationship between thinking styles and cognitive load: A contextual study of Arab special learners Mogbel Aid K Alenizi Northern Border University alenizimogbel@gmail.com Abstract: The current study aims to assess the relationship between thinking styles and cognitive load of regular students and of the students with learning difficulties. It also evaluates to what extent cognitive load is related with patterns of thinking according to Harrison and Bramson’s theory. Random samples of 105 male and female regular students’ along with 79 male female students with learning disabilities were chosen for the study. An interview form was used to identify the family situation of the samples and the Raven matrix sequence test was used to determine the intelligence level of those with learning difficulties. To diagnose the nature of samples’ learning difficulties, Michael Best’s scale was used and to measure five thinking patterns (synthetic, ideal, pragmatic, analytical, and realistic) researchers’ self designed tool was used. To measure cognitive load, a scale prepared by ASRC was used. The results of the study indicated that those with learning difficulties think random, i.e. they do not use the five methods of thinking in an organized way for their academic achievements and in problem solving which burdens their cognitive faculty. As for regular students, their thinking was organized, and they used the five methods of thinking in a regular manner to enhance their academic achievement, which eventually reduces their cognitive load. Keywords: Cognitive load; thinking patterns; Harrison and Bramson theory; special learners; learning disability Article History Submitted: 13 May 2020 Accepted: 18 June 2020 �Journal of Education and Humanities Volume 3, Issue 1, Summer 2020 1. INTRODUCTION It is important for students to acquire scientific knowledge and operations, thinking skills and problem solving skills, but the common teaching practices in the educational field pay more attention to memorization, but rarely pay attention to the mental processes of the learners which eventually is reflected in learners’ differential levels of educational achievement. Cognition helps us understand human behavior through the mental processes; it is significant in learning processes as well because knowledge acquisition goes through several stages until it stabilizes in the mind (e.g. emotions, awareness, attention and memory). Due to the limited capacity of the brain, the information stored determines the nature of its processing. Every individual has his/her own cognitive capacity to process a mental function, and any disturbance in such processes cause cognitive load. The educators and teachers should not give excess information as the increased load of information may hinder the learning process of the ordinary students, and students with special needs in particular (Zoghbi, 2012). Al-Maati (2005) indicated that thinking is a refined cognitive process that involves re-organization of the elements of a given situation in a noble way that requires problem solving skill. In other words, it involves many other cognitive processes such as attention, awareness, remembrance etc., and some cognitive skills such as classification, conclusion, analysis, installation, comparison, generalization and so on. There are a number of theoretical perceptions of thinking styles that differ from one another in terms of individuals’ preference in their thinking. One such model is the Paivio model (1971), which envisions the existence of two types of preferences of individuals and their ways of thinking: verbal thinking and conceptual thinking. Harrison & Bramson’s (1982) model proposes that the idea of thinking styles are closely related to the study of educational psychology and cognitive psychology, as the roots of research in the methods of thinking emerged in the early seventies of the last century as naming of personal concepts, but the concept of style is more related to personality (Harrison & Bramson, 2008). For those with learning difficulties, it is clear that they have difficulties in memorization, understanding, attention and awareness. They mainly suffer a lack of understanding and awareness, so those involved in developing curricula should take into account learners’ low ability of retaining and understanding information. Saudi Arabia is witnessing an alarming increase in the number of cases with learning difficulties. As their percentage ranged from 5% to 10% of the total population, the cognitive load of learners with learning difficulties needs to be taken care of well, so that the decision-makers could take into account their low abilities of memorization and understanding (Aburiah 2007). The presentday students need reduced load of knowledge/information during their learning process in order to use their higher thinking skills which require a lot of information and extensive mental processes for a successful learning (Mai, 2012) 4 �Relationship between thinking styles and cognitive load: A contextual study of Arab special learners Mogbel Aid K Alenizi Statement of the problem The cognitive load theory is related to facilitating the processing of information in working memory with a lot of efforts (Sweller et al, 1998). Memory, with its coding, storing, and retrieval of information, is the basis for most of thinking and learning. Discrimination and recognition processes also depend on memory, so that the individual can perform several mental processes through the information stored in the memory (Abboud & Jassem, 2011). The cognitive load is concerned with the way in which knowledge resources are used during the process of learning and problem solving (Shehab, 2011). Thus, thinking styles are influenced by the nature of the subject (the internal cognitive load) or the way in which students demonstrate the required information and activities (the external cognitive load) (Sweller, et al., 1998). Therefore, educational materials should be designed to keep learners' cognitive load at its lowest level during the learning process (Stachel, 2011). Each learner has a preferred style of processing information, which is also known as learning method. Therefore, the level of cognitive load during the learning process may be affected by the learner's preferred learning method or his/her method of processing the information presented to him. The cognitive load theory is based on cognitive structure consisting of partially independent processing operations for visual / spatial verbal and auditory information that interact with long-term memory (Pass, et al., 2003). From the above it is clear that the excessive cognitive load negatively affects the styles of thinking. The level of cognitive load can be reduced by finding effective ways to present information to the learners. Learning methods can explain the differences among learners and in terms of the ways they process information. Given the paucity of studies in Arabic context, the present study explores thinking styles in the light of Harrison and Bramson's theory and its relationship to the cognitive load of ordinary students and those with learning difficulties, by answering the following two questions: Is there a relationship among the styles of thinking (synthetic, idealistic, pragmatic, analytical and realistic)? Is there any relationship between thinking style and cognitive load of the learners? Objectives of the study The study has following objectives: a. What are the patterns and levels of cognitive load between the students with learning difficulties and regular students? b. How Harrison and Bramson's theory accounts for this difference? Theoretical Background The cognitive load theory has recently become one of the crucial theories to describe cognitive processes involved in learning using multimedia or internetbased learning (Brunken, et al, 2003, p. 53). Pass et al (2003, p.1) refers to cognitive load theory as a framework for research on cognitive processes and educational design. Allen (2011, p. 11) suggests that cognitive load theory assumes that an 5 �Journal of Education and Humanities Volume 3, Issue 1, Summer 2020 individual allocate part of his mental processes in order to process or learn a bundle of information. To perform a task, the amount of knowledge resources needed requires processing of memory, which eventually loads the cognitive efficiency (Huang et al, 2006, p. 141; Yao, 2006; Curie, 2008). The idea of cognitive load theory is based on the premises that working memory has a very limited capacity and learning process needs active working memory. If the working memory capacity exceeds the maximum limit, then the learning becomes ineffective. It assumes that long-term memory has unlimited capacity. Increased levels of cognitive load may result from the content of educational materials, problem solving skill in learning using traditional methods (Abu Riyash, 2007, p. 196). Therefore, there should be variation in the content to suit various learning methods (Sweller, 2008). Adnan Yousef Al-Atoum (2004) sees that each individual has his/her own way of thinking, and the way of thinking measures individuals' linguistic and cognitive preferences and their levels of flexibility in their work and in their dealing with others; though there are different approaches to the understanding of thinking style in terms of types and nature of the methods followed by individuals in their thinking processes. For instance, the Paivio model (1971) envisions two types of individuals' preferences; verbal reasoning and conceptual way of thinking. Harrison and Bramson referred to the individual’s preferred methods of dealing with different life situations, and these methods include the scale of thinking as prepared by Harrison and Bramson (Magdy Abdel Karim Habib 2008, p. 5-11). It includes the following methods: A. Synthetic thinking means the individual’s ability to communicate new and original ideas is completely different from what others do in synthesizing various ideas. In this process, an individual looks for views that may provide better equipped solutions, and link seemingly opposing views. It requires clarity and creativity. B. Idealistic thinking is the individual's ability to form different points of view towards goals and to pay attention to the needs of what is beneficial for him and the society. It focuses on social values. C. Pragmatic thinking is the individual's ability to verify what is right and wrong in terms of personal experience and freedom to experiment and excel in finding new ways of doing things using the available resources. D. Analytic thinking is the individual's ability to confront problems carefully and in a systematic way, pay attention to detail and plan carefully before making a decision, and collects as much information as possible while not forming a holistic view (Anwar Omar Ibrahim, 2007, p. 18). E. Realistic thinking includes reliance on observation and experimentation of the real life things or events. 2. REVIEW OF RELATED LITERATURE Cognitive Load: Working memory (WM, hereafter) regulates the efficient use of cognitive resources (Mayer & Moreno, 2003), and there are other factors too such as 6 �Relationship between thinking styles and cognitive load: A contextual study of Arab special learners Mogbel Aid K Alenizi individual traits and knowledge repository, as well as fresh information related to a specific task (Wouters, Paas, & van Merriënboer, 2009). Individuals with greater WM capacity have more attentional capacity to devote to complex tasks; thus, an individual with high WM may experience less cognitive load (i.e., find the task less difficult) than an individual with low WM. The established relationships between WM and performance on complex tasks (Geary, Frensch, & Wiley, 1993; Linderholm & van den Broek, 2002; Schelble et al., 2012), and between cognitive load and complex task performance (Beilock & DeCaro, 2007; Paas et al., 2003) support this idea. Thus, individuals with fewer attentional resources (i.e., lower WM) are likely to perceive a complex task as requiring more mental effort than those who possess more attentional resources. Given the impacts of cognitive load and WM on complex tasks and the similarity of the demands of creative thinking tasks to other complex tasks (Beaty & Silvia, 2012; Benedek et al., 2012; Benedek et al., 2014; Nusbaum & Silvia, 2011; Lee & Therriault, 2013; Silvia, 2015), links among WM, cognitive load, and creative thinking are likely. Flad (2002) conducted a study aimed at identifying the effect of increasing cognitive load in the standards of self-report and bilateral tasks of mental effort in the problem solving process. The results of the study indicated that there was a positive and statistically significant relationship between the cognitive load and the difficulty of the task. Likewise, Farnsworth (2009) conducted a study aimed at identifying differences in the Cognitive load as perceived by teachers in training manual or electronic assistive technology to teach reading and writing to the blind. The results of the study showed that there were no statistically significant differences between the groups of technological devices in quantitative measures of cognitive load or the efficiency of the Braille method in learning to read and write. While the results of the interviews indicated that there were qualitative differences in the required mental effort (cognitive load) between the groups of technological devices. Abdul Amir Aboud and Mahdi Jassem (2011) conducted a study aimed at identifying the level of cognitive load among middle school students, and identified the differences between males and females from arts and science specializations. The results indicated a decrease in the level of cognitive load among the sample members in general, but there were no statistically significant differences in terms of gender and specializations. The results also indicated that there were no statistically significant differences in the level of cognitive load in terms of areas of study. Abu Joudeh (2004) aimed to know the effect of an educational program based on the theory of cognitive load in developing critical thinking skills. Statistical indication of the California test of critical thinking skills as a whole and of each skill reflected the effectiveness of the educational learning program based on cognitive load theory in developing critical thinking. AlShamsi and Hassan Study (2009) aimed at knowing the cognitive load of middle school students in Baghdad, and concluded that there were statistically significant differences in their possession of a low ability to high ability tasks. 7 �Journal of Education and Humanities Volume 3, Issue 1, Summer 2020 The study also concluded that there were no statistically significant differences in terms of their gender and specializations. Thinking Styles: Fouqia Abdel-Fattah (2007) explored the relationship between thinking styles and moral judgments, and revealed that there were differences between the prevailing thinking methods among the academic staff, as per their styles and specializations. The results indicated that there were statistically significant differences between the averages of male and female. Ideal thinking style was in favor of females, and analytical thinking style was relatively in favor of scientific specializations. Al-Sukari and Abdul-Fattah (2006) studied emotional intelligence and its relationship to thinking styles among a sample of university students. The study revealed that there was statistically significant positive relationship between emotional intelligence and ideal and analytical thinking styles, but statistically significant negative relationship between Pragmatic thinking styles. There was a statistically significant relationship with the rest of the thinking styles. Zhang, Li-Fang (2001) showed the relationship between thinking styles and personality patterns. 3. RESEARCH METHODOLOGY The research sample included a group of regular students and students with learning difficulties who were randomly selected from some primary schools in the northern border region of Rafha, Saudi Arabia. A total of 105 regular students included 60 males and 45 females. A total of 79 learners with learning difficulties included 56 males and 23 females. The study was conducted in the second semester of academic year 2019-2020. The method used in the current study was descriptive in nature. Pearson correlation coefficient was used to measure thinking styles and cognitive load of the students with learning difficulties. The same was used for the regular students as well. Hypotheses: The hypotheses formulated are as follow: H01 = There is no statistically significant correlation between the scale of thinking styles and the measure of cognitive load among students with learning difficulties. H2 = There is a statistically significant correlation between the scale of thinking styles and the measure of cognitive load among ordinary students. Study tools: Family Diagnostic Interview Form: The aim of the questionnaire was to identify the economic, social and cultural levels due to the important role of these levels in influencing research variables. 8 �Relationship between thinking styles and cognitive load: A contextual study of Arab special learners Mogbel Aid K Alenizi Raven Colored Sequential Matrices (Takaneen, Emad Ahmad Hassan, 2014): Its goal was to measure intelligence, and it was largely free of cultural influence. It mainly depended on the collective application. It could be applied individually in certain circumstances. Successive matrices consisted of 36 items distributed in three sections: (a), (a) b, and (b), and colored matrices were suitable for ages from 5.6 to 10.5 years, and were suitable for those who had disabilities. Colors were used as the background to the problems, to make the test more interesting and clear. Psychometric properties of the test: Stability of the test: The coefficient of persistence in the study sample ranged from male and female students to repeat the test after two weeks to the stability factor of (0.85), and p-value at the level of (0.01). Validity of the test: Formative validity was used, where the correlation coefficient was estimated by months between the total grades (0.77) in the first application of the test, while the correlation coefficient was (0.81) in the second application. A student’s behavior scale (Best and Sharif, 2007) was used to assess the nature of learning difficulties of the samples. This scale is one of the survey tools for the detection and initial recognition of learning difficulties through the teacher’s assessment of the verbal and non-verbal behavioral features. Verbal measure includes assimilation and language whereas non-verbal measures include general knowledge, motor coordination, personal and social behavior. This scale was valid for individual application in the age group of 5.5 - 14 years, and it consisted of 24 questions sets distributed on two scales; 13 questions sets for the verbal scale and 11 for the non-verbal measure. Under each paragraph five graded questions (1, 2, 3, 4, 5………………) were given wherein each grade represented the level of teacher’s assessment of the student's ability. The score ranged from 24 to 120. The score was interpreted on the basis that each regular student got a score of minimum 48 and students with learning difficulty got lesser than that. The psychometric properties of the scale Honesty: Michael Best (1981) codified the scale to assess the significance of honesty of the sample, whereby the validity of the scale for gender variable was * 17.32 and the status of learner variable (normal students, and students with learning difficulties) was 98. 28*. The confidence interval was found to be 0.38 – 2.25. To measure thinking styles within the framework of Harrison and Bramson's theory, the researcher adopted the following five thinking styles: synthetic, ideal, pragmatic, analytical, realistic. These five styles represented a reference framework and thus the researcher validated that in that case the content of the scale was able to achieve the set out goals. The researcher had the following procedures in building the scale: 9 �Journal of Education and Humanities Volume 3, Issue 1, Summer 2020 The content of the questions sets was well defined. The questions sets were developed in the light of Harrison and Bramson's theory. The total number of question sets (25) was divided into five dimensions; each dimension was having five questions sets as distributed in table 1 below: Table 1. Distribution of questions and questions sets thinking style-wise Dimensions Order of questions No. of question sets Realist 1-2-3-4-5 5 Synthesist Pragmatist Analyst 6-7-8-9-10 11-12-13-14-15 16-17-18-19-20 5 5 5 Idealist 21-22-23-24-25 5 Psychometric properties of the scale: To ensure statistical validity, it was applied to a sample of 25 students, and the following equation was applied to the results. (Z = 2) = Seronov - Colmogrov = to know the nature of the distribution of data (normal or not). The significance level of 0.01 meant that the distribution was not normal. Since the distribution was not normal, laboratory tests were not applied to the data, rather non-parametric tests were applied to data (Mann-Whitney's test for calculating terminal honesty). The results are as shown in the following table 2: Table 2. Results of psychometric properties of the scale test Gr. N Total Avg. Z value Sig. St. sig. score score level Max 8 100 12.5 3.393 0.001 Sig. Min 8 36 4.5 The table above shows that the value of the significance level is 0.001, which is statistically significant, because it is less than 0.05. This indicates that there are differences between the maximum and minimum. This means that the tool has terminal honesty. Internal consistency validity: To extract this type of validity, correlation coefficients were found between the five styles and the results as shown in Table 3 below: Table 3. Correlation coefficients between the five thinking styles Correlation Syn. Ideal. Prag. Analy. Real. Factors Synthesist 1 **-.202 *-0.10 **-0.347 **-0.297 Idealist 1 **-0.307 **-0.191 **-0.272 Pragmatist 1 **-0.272 **-0.161 Analyst 1 *-0.11 10 �Relationship between thinking styles and cognitive load: A contextual study of Arab special learners Mogbel Aid K Alenizi Realist 1 It is clear from table 3 that there is a negative correlation with a function at the level of 0.01, but it is very weak among the five thinking styles. The negative correlation between one group (structural and pragmatic) and the other one (analytical and realistic) is at the level of 0.05. It is indicated that negative correlations are quite higher at the top level factors, but it decreases over the downward factors. The results confirm the validity of the scale because the styles are distinct and are independent of one another. Stability of scale: The stability was determined by the following two styles: Mid fragmentation, Alpha-Cronbach equation The value of each of them is as shown in the table 4 below: Stability type NA Table 4. Stability of scale test results SpearmanSig. AlphaSignificance Brown level Cronbach level coefficient 0.78 0.001 0.73 0.003 It is clear from the table that the stability coefficients have relatively high values that allow the tool to be applied safely, and with this form of honesty and reliability the tool has become valid. The cognitive load scale as prepared by the American Space Agency Research Center (ASARC), was further translated and codified by Al-Banna (2008). The researcher assessed the cognitive load and its relationship to the styles of thinking of ordinary students and of those with learning difficulties, on the task load index of the National Aeronautics Space Administration (NASA), which allows measuring the total workload by itself during the completion of the task or immediately after it. It consists of six dimensions; each of them constitutes a source of the total workload represented in defined requirements such as physical requirements, time requirements, performance, effort, and frustration. It also consists of a scale sheet assessing the degree to which the scale dimensions contribute to the overall load. The scale included a description of the five dimensions and instructing the student to place a mark (x) on the intersection of eleven gradients with the horizontal line under each question and make sure to place a mark (x) on one of the gradient lines and not between the gradient marks. The total load is calculated by dividing the total cognitive load of the six measures divided by 15 which is the number of possible statistics between each pair of measures. The study found that there is a high degree of honesty, as the correlation coefficient is 0.52 between the scale of thinking styles and the cognitive load (Al-Banna, 2007). Al-Banna (2007) verified the stability of the scale by the Alpha Cronbach method with a value of (0.77). It 11 �Journal of Education and Humanities Volume 3, Issue 1, Summer 2020 is clear from the above that the scale enjoyed a good degree of honesty in many studies and therefore it was used in the current study as well. Research procedures: The researcher followed the following steps in carrying out the research as follows: A questionnaire was applied to identify the economic and social status of the sample so as to ensure that these conditions did not affect the study variables. The scale of thinking styles and cognitive load was applied to 105 ordinary students in some government primary schools in the northern border region of Rafha, to determine the mental requirements of their preferred methods of thinking. The questionnaire of methods of thinking and the cognitive load was applied to 79 students with learning difficulties from some government primary schools in the northern border region in Rafha. The procedures for diagnosing learning difficulties carried out in two stages: first, application of Raven's successive matrix test to determine the level of intelligence of the sample, which measures non-verbal intelligence, and was largely free from any cultural influence, second, using the Michael Best scale to diagnose and identify people with learning disabilities. The researcher used statistical methods to know the effect of the five thinking methods (syntactic, idealistic, pragmatic, analytical and realist) on the cognitive load of students with learning difficulties and of regular students as well. 4. RESULTS & DISCUSSION The First hypothesis: 1. There is no statistically significant correlation between the scale of different styles of thinking (synthesist, idealist, pragmatist, analyst, and realist) and cognitive load among students with learning difficulties. Pearson correlation coefficient was used to measure the relationship between thinking styles and cognitive load of the students with learning difficulties. The results of the Pearson correlation coefficient are given in table 5 below: Table 5. Pearson correlation coefficient result of students with learning difficulties Thinking Total degree of cognitive Styles load Synthesist 0.004 Idealist 0.005 Pragmatist 0.006 Analyst 0.003 Realist 0.008 ) -(there is no correlation 12 Indication *---*----*--------* ----* �Relationship between thinking styles and cognitive load: A contextual study of Arab special learners Mogbel Aid K Alenizi It is clear from table 5 that there is no correlation between the thinking styles and the cognitive load of people with learning difficulties. This means that they have random thinking, that is, they use the five thinking styles in a random, disorganized manner, and this also indicates that the sample suffers from this weakness due to, to the fact that students do not use sound mental awareness in their academic achievement, which increases their cognitive load. The second hypothesis: There is a statistically significant correlation between thinking styles and cognitive load among ordinary students. The results of the Pearson correlation coefficient are given in table 6 below. Table 6. Pearson correlation coefficient result of regular students Thinking Total degree of Cognitive load methods Synthesist 0.238 Idealist 0.235 Pragmatist 0.240 Analyst 0.236 Realist 0.237 (**)(t) is at 0.01 Indication ** ** ** ** ** It is clear from table 6 that there is a correlation between thinking styles and cognitive load of regular students. This strong relationship means that thinking is organized for them, that is, they use the five methods of thinking in an organized way. This indicates that the sample has the ability to use the five thinking methods in their academic achievement and in solving their problems. This may be due to the fact that students use mental perceptions in a proper way in their academic achievement in their efforts to use their ability to organize the curriculum content and reduce their cognitive load. Psychologists and educational researchers believe that explicit instructions are necessary for the learners to do the best what is expected of them (Klahr & Nigam, 2004; Mayer, 2004), and they have provided empirical support to their claims. Research has clearly shown that for novices (almost all), explicit instruction is more effective than partial guidance (Clark, Kirschner, & Sweller, 2012). Zhang (2002) found that students with higher cognitive development level tended to use a wide range of thinking styles than the students with lower cognitive development. The results of the present study suggest similar patterns wherein normal students follow a regular pattern in terms of thinking styles during a cognitive function, whereas the students with learning disabilities exhibit a random pattern. Thinking styles vary among the regular students exhibit a particular style of thinking (study based on Sternberg’s theory of selfgovernment) under the dimensions of functions, forms, levels, scope and learning (Thomas & John, 2019). They observed differences in preferences of 13 �Journal of Education and Humanities Volume 3, Issue 1, Summer 2020 thinking styles in terms of gender, but the present study exhibited contrary results. Thomas and John’s (2019) study helped the learners’ self-efficiency to gain a sense of self-efficiency, and also helped the teachers to better realize students’ strengths and weaknesses to take necessary steps to compensate for their limitations. Cheng (2019) also proposed similar results that qualitative conception of learning was significantly related with a wide range of thinking styles among the students with hearing impairments. Likewise, this present study found a direct relation between thinking styles and learners’ cognitive load. Overloaded working memory during various learning processes cause learning impairments in normal cases as well (Kalyuga, 2015, 2016; Sweller, 2011). Therefore, it is imperative to note that the students with learning difficulties do suffer cognitive burden in their learning processes if the content and the teaching strategies are not considered well (Likourezos et al, 2019). 5. CONCLUSION & RECOMMENDATIONS In conclusion, the researcher presents a set of recommendations which is expected to lead the development of educational work by reducing the cognitive load by using thinking styles that encourage creativity. The recommendations are: 1. Teachers should be encouraged to diversify their teaching methods to suit learners’ thinking patterns. 2. Agencies and institutions concerned with students with learning difficulties should provide them with educational programs appropriate for the learners, such as the Learning Resource Room (LRC), because this would reduce the severity of the difficulty of the student, and trained and qualified staff should follow-up well to deal with the cases of learning difficulties. 3. Attention should be paid to students' preferred methods of thinking, especially those with learning difficulties, and taking this into consideration while framing educational curricula and designing educational activities that may stimulate creativity and innovation. 4. Appropriate attention should be given to school activities that encourage creativity, and improvise methods of thinking that encourage creativity. 5. Establishing educational programs and holding workshops and seminars dealing with explaining the types of thinking and their roles in educational process; these will eventually help in reducing the cognitive load of the students with learning difficulties and of regular students as well. 6. 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Cognitive architecture and instructional design: 20 years later. Educational Psychology Review, 31. https://doi.org/10.1007/s10648-019-09465-5. Sweller. (2008). Cognitive load theory. University of Newsouth Wales, www.scitopics.htm. Sweller, J., Ayres, P., & Kalyuga, S. (2011). Cognitive load theory. New York, NY: Springer. Vlad, J. (2002). The effects of increasing cognitive load on self-report and dualtask measures of mental effort during problem solving. Doctoral dissertation, University of Southern California. Yao,Y.(2006).The effect of different representation formats of hypertext annotations on cognitive load , learning and learner control . Doctoral dissertation, University of Central Florida. Zhang, Li-Fang, (2001): Thinking styles and personality (types), Revisited personality and individual differences, 31(6), 883-894. 17 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Title A name given to the resource Relationship between thinking styles and cognitive load: A contextual study of Arab special learners https://omeka.ibu.edu.ba/files/original/766faf60834127df957d56605f1be0c5.pdf 4a76826541879df5ee4985fdabe184bc PDF Text Text 1st International Syposium on Sustainable Development, June 9-10 2009, Sarajevo Relationship Of Environment-Industry In Sustainable Development Çiğdem Ünal Atatürk Üniversity KKEF Erzurum, Turkey Buket Karatop Atatürk Üniversity Faculty of Engineering Erzurum, Turkey Abstract: Thought of analysis necessity of environmental problems arising from production have become prevalent as a principal concern with onset of utilization concept of sustainable development in industry. Sustainable development has comprehensive dimensions as economical, environmental and cultural aspects. However, only dimension of environmentindustry of sustainable development has been handled in this study. Problems put forward within this relationship framework are industrial solid wastes, waste water, energy consumption and hazards which release sources give to environment. Amount of industrial solid waste of Turkey in 2004 is 17.4 million ton and out of this, only 7.7 % proportion part has been recycled, 46.9 % has been disposed of. These disposed solid wastes have been removed by pouring 47.2 % rate to seas, lakes and rivers. Rate of solid water released without treated in the same dates is 64.1 %. Industry has 30.7 % share in CO2 emission. In addition to this, amount of greenhouse gas emission shows increase in each year. Turkey requires more clean and renewable energy sources in terms of sustainable development. Keywords: Sustainability, sustainable development, industry, environment, solid waste, waste water, energy Introduction Respectto nature. Management of allspecies and natural resources should be taken care ofinline with sustainable development principles. However, endless abundance which nature has presented us can be preserved and can be transferred to future generations through these means. Current unsustainable production and consumption moulds are to be changed for the sake of our and our children’s welfare. (6th Article of UN Millennium Sum mit Decisions) One of the most fundamental values discusses in UN Millennium Sum mit held in New York on September 6-8, 2000 has been the issue of respect to nature. Supplying environmental sustainability, development principles and programmes of countriesfrom Millennium Development objectives handled in eight separate areas have been discussed and it has borne necessity of formation of new strategies. Sustainable Development has been defined as development meeting current requirements without making concessions from requirements offuture generationsin Rio Sum mit which World Com mission on Environment and Development. Ultimate decisions documents of Rio Sum mit have affected agenda of UN meetings to be held soon after. Sustainable development and environmental relationships constantly have formed agenda topics in World Population Development Conference (1994), World Social Development Sum mit (1995), Habitat II(Đstanbul1996) and Millennium Sum mit(2000). Significant steps have been taken in recognition and acceptance of this concept by business world and industry and enabling it measurable within ten years following this Rio Conference. Business Council for Sustainable Development Turkey (TBCSD) has been running mutual studies and program mes made with World Business Council for Sustainable Development (WBCSD), United Nations Development Programme (UNDP), State Planning Organization (DTP) and the Ministry of Environment. WBCSD which has its head office in Switzerland has 55 regional representatives and world company member more than one thousand. Sustainable developmentis not discussed through sole environmental dimensions withinthe framework of macro economical policies targeted for 21st century. Itis constantly emphasized that equilibrium between these aspects should be observed for obtaining sustainable results in long-term period without disregarding the fact that social, economical and environmentalfactors are unceasingly interacted with one another. It is essential not to disregard relationships of all these dimensions in all studies to be conducted in regard with sustainable development which possess social, economical, environmental and cultural aspects. 316 �1st International Syposium on Sustainable Development, June 9-10 2009, Sarajevo Industrialisation which constitutes first and fundamental approach of sustainable development in this study conducted has only handled environmental dimension in relationships of sustainable development.Issues such as environmental pollution arising from industrial wastes and wastesin Turkey, preservation of natural sources and recycling methods related with its management, energy sources used in industry and conformity with release standards have been discussed in detail. While conducting these researches, relationships of industryenvironment of sustainable development in Turkey have been elucidated with the help of tables and graphics by providing the most recent data which Turkish StatisticalInstitution (TUĐK) has published hereof. Relationships of Industry-Environment in Sustainable Development W hen environmental dimension of sustainable developmentin Turkey has been evaluated in terms of industry,itis seen that emergent problems are generally related with infrastructure. Wastes emerged along with industrialization lead to air, water and soil pollution. It is encountered with bureaucracy and infrastructure problems in implementation of respective legislations and other legal regulations concerning control of these wastes. Yet,suitable elimination plants ortechnological choices which shall provide meeting limit values which these regulations stipulate should be in improved level. If industrialized countries lack suitable systems and plants for specifically industrial wastes and their disposal,itmight be impossibleto sustain development. Nowadays, energy and energy costs continue to be significant problem in industrial sector. Energy sources used either comply withrelease standards or constrain competition conditions due to high cost. This case herewith increases uncontrolled and unconscious applications. 1. Industrial Wastes and Environmental Pollution Environmentallegislation in Turkey constituted atthe beginnings of 2000 in a great extent. Seven main legislation carrying importance in regard with industrial world are in question within this scope. These are legislations of environmental effect evaluation, control of solid wastes, control of hazardous wastes, control of air quality, water pollution and control of pharmaceutical wastes. Scientific and periodic data assertedin allthese areas are vitalin regard with adaptation of concept of sustainability accurately and measurability. A general evaluation can be handled underthe headlines given below interms of sustainabilityin regard with effects ofindustry on environment. 1.1. Solid Wastes Waste method in industry is one ofthe mostimportant componentsinimplementation ofsustainability principle. Wastes arising from industrial production and services involve proper managementin compliance with environmental and human health by diminishing loss of raw material. Reducing waste amount,recycling, disposal of wastesin compliance with environmental and human health are among principal objectives of sustainable development. W hen we examine industrialsolid waste amountsin 2000-2004 in Turkey (Table 1), we can see that there is an increase in totalsolid waste amounts along with increased industrialization. The amount being 17.059 thousand ton/yearin 2000 has increased to 17.498 thousand ton/yearin 2004. No significant development has been made in solid waste recycle issue with the increase in these amounts. While 8.5 % of waste amounts were recycled or re-used,thisrate decreased to 7.7 % with even falling drastically in 2004. Total amount of waste Thousand tonnes/year 2000 17 059 2004 17 498 Source; Tüik, 2006; 23 Recycled and reused Thousand % tonnes/year 1 460 8.5 1 346 7.7 Sold or donated Thousand tonnes/year 5 916 7 943 Disposed of Thousand tonnes/year 34.6 9 683 45.4 8 209 % % 56.8 46.9 Table 1. Total amount ofindustrial waste W hen sources of wastes are examined, four main sectors come to the fore as construction, mining, industry and domestic garbage. Such wastes are recycled in 90 % rate in some countries such as Germany, Denmark and the Netherlands. While rate ofindustrial wastes is 17 % in these countries(Ayvaz, 2004),thisrate is 30 % in Turkey (DĐE,200;164);rate of recycled industrial solid wasteis only 8 %. (Figure 1). 317 �1st International Syposium on Sustainable Development, June 9-10 2009, Sarajevo 8% 47% Recyled and reused Sold or donated 45% Disposed of Figure 1. Distribution range of amount ofindustrial solid waste Recycled and reused Sold or donated Disposed of Total Thousand % Thousand % Thousand % Thousand tonnes/year tonnes/year tonnes/year tonnes/year 2000 142 10.8 343 26.2 823 62.9 1308 2004 71 5.9 248 20.7 877 73.3 1196 Source; Tüik, 2006;23 Table 2. Amount of hazardousindustrial waste There occurred 1.2 million tonnes hazardous industrial solid waste in 2004 in Turkey. (Table 2). When we compare this amount with the year of 2000, we can see a decrease accordingly. Additionally, there is a decrease in the rate of recycled hazardous solid waste. While 10.8 of hazardous waste were recycled, 5.9 ofthis were recovered in 2004. However, rate of disposed hazardous waste increased from 62.9 % to 7.3 %. Whereas disposal and recycling plant capacities of existing industrial waste are not adequate for waste amount arising from sources from country industry, adequate wasteis not dispatched to even existing plants. Primary reason for this can be specified such that control inadequacy and industrial institutions’ not being ready for high waste disposal costs.(The Ministry of Environment, 2002;116). Industry group Recycled and reused Disposed of Sold or donated % % % Manufacture of food and beverages 2.4 31.3 66.3 Manufacture oftobacco products 27.3 37.5 35.2 Manufacture oftextiles 1.4 22.3 76.3 Manufacture of paper and paper products 8.5 49.8 41.7 Manufacture of basic metals 9.9 63.5 26.6 Source;tüik.gov.tr Table 3. Table 3. Methods ofelimination of solid wastes in industrialsectors, 2004 W hen we examine industrialsolid waste elimination methods ofimportantindustry branches located in our country (Table 3),itis seen that Food sector disposed of 31.3 % of waste by selling or donating 66.3 % and re-evaluated 2.4 % by recycling. 37.5 % of wastes come out in tobacco industry was disposed and 35.2 % was sold. Whilethe highestrate within disposed tobacco industry belongsto base metalindustry,the highestfigure in rate of sold or donated waste is seen in textile industry. Recycled highest waste rate is in tobacco industry. Recycled waste rates ofindustrialsectors have not reached desired level yet. 318 �1st International Syposium on Sustainable Development, June 9-10 2009, Sarajevo Industry group Municip al dumping site Controlle Incineratio Ope d landfill n n area Stored within the establishme nt Dumpin g into sea,lake or river Using as filling materi al 11.6 Buria Other l s Manufactur 49.0 2.5 0.1 0.02 29.8 0.4 0.2 e of food and beverages Manufactur 7.4 73.2 0.2 2.6 e of tobacco products Manufactur 72.2 24.3 1.0 1.8 0.02 0.2 0.04 e of textiles Manufactur 94.5 1.7 0.2 3.5 e of paper and paper products Manufactur 1.5 8.5 0.2 7.1 78.5 4.1 e of basic metals Manufactur 5.6 8.9 80.6 0.00 4.6 0.005 0.3 e of motor 1 vehicles and trailers Turkey 20.0 10.9 2.4 0.1 9.3 47.2 7.7 1.0 Source:tüik.gov.tr Table 4. Amount ofindustrial waste by disposal methods and industry group, 2004 (%) 6.3 16.5 0.02 0.05 0.02 0.001 1.2 In Table 4, amounts and disposal methods of Turkey’s disposed solid waste industry amount have been shown according to importantindustry groups. W hen we primarily examine disposal methods of total of Turkey, we can see that wastes in the highest rate are dumped into seas,lakes and rivers with 47.2 % rate. Yet, pollution of water sources with industrial wastesisthe most crucial point which we should attach importance in these days of mentioning effects of global warming. It has been determined thatrate ofindustrial waste dumped into municipality dumping site is 20 %. Disposal of with control landfill is 10.9 %, storing within the establishment is 9.3 % rate of using as filling material is 7.7 %. Only 2.4 % of industrial solid wastes are disposed of by incineration and 1 % of it by burying. Dum ping into sea, lake or river 16% Municipal 12% Controlled landfill 58% 14% 0% Stored w ithinthe establism ent Others Source; Table 4. Figure 2. Disposal methods ofindustrial solid wastes W hen we examine distribution of disposal rates by means of municipal dumping site among sectors,it can be stated thatthe highestrate belongs toindustry of paper and paper products with 94.5 % rate.(Table 4).In 319 �1st International Syposium on Sustainable Development, June 9-10 2009, Sarajevo second sequence,textile products with 72.2 % and food products and beverage industry with 49 % can be seen. The sector which uses disposal methods maximally by storing solid wastes regularly is the industry of tobacco products. (%73.2). Base metal industry which has the highest rate of disposal by dumping into seas,lakes and riversisthe industry sector which pollutes environment maximally.(78.5). However, when we examine average annual disposal amounts of manufacturing industry and rates of annual waste disposal,it can be seen that the highestfigure and rate belong to base metalindustry. Amount ofindustrialsolid wastein 2004 was 17.4 million tonnes and 8.2 million tonnes of this was disposed of. (Table 1). Amount of disposed industrial solid waste in 2004 is over 4.9 million tonnes and itsratein Turkey totalis approximately 63 %. 1.2. Waste Water Importance of water is increasing each passing day as a result of increase of rapid industrialisation, population growth and domestic water usage. Though only 11 % of water obtained from naturein our country is used in industry, problem of waste water arising from industry is becoming more important. (Ç.B. 2002;112). Waste water standards are applied withinthis scope with Water Pollution Control Legislation published in 1988. Waste water discharge in industry has been tied up to discharge permit certificate renewed once in a three years. Environmental Effect Evaluation (ÇED) Legislation published in 1992 is notimplemented in a desired level.In addition to this, it is being compulsory somehow in the issue of taking required precautions in regard with preservation of water sources. A mount of water consumed Thousand m3 / year 2000 1 454 061 2004 1 215 090 Source; Tüik, 2006; 23 A mount of water recycled Thousand m3 / year 516 589 410 300 % A mount of waste water discharged Thousand m3 / year 35.5 746 877 33.7 637 756 % 51.3 52.4 Treated Thousand m3 / year 235 530 228 440 Untreated % Thousand m3 / year 31.5 511 527 35.8 409 316 % 68.5 64.1 Table 5.Water usage and waste waterin manufacturing industry W hile water amount consumed in manufacturing industry in 2000 in Turkey was 1.4 billion m3, it was approximately 1.2 m3 in 2004. Therefore, whereas there is decrease in re-used water rates in same periods,itis recorded that there is increase in discharged and treated water rates. While 51.3 % of water used in industry in 2004 was discharged, this rate increased to 52.4 % in 2004. Water rated treated in the same manner increased from 31 % to 35 %. (Table 5). Agreements signed between some industrial sectors (Paper,fermentation, sugar, leather etc.) and the Ministry of Environment for encouraging construction of waste watertreatment plants and industrial investments made with this purpose led an increase in the number of mutual treatment plants in specifically organized industrial zones. Increase in number of industrial institutions having certificate of environmental management system such as ISO 140002 made positive contributions to preservation of water sources. Number ofindustrialworkplaces with ISO 14000 certificatein 2008 is 1174. Number of workplace with ISO 14001 certificateis 259. (TÜĐK, 2006;23). Crises lived from time to time in economy of Turkey and high energy costs affect proper operation of watertreatment plants and investments of waste watertreatment plants negatively. Desire ofimplementing Aqua cultural Legislation which has brought too low discharge limits in the regions where specifically industry is denseis notregarded as realistic by industrialinstitutions. Since itis almostimpossibleto stepping down to these discharge limits,there occur problems in implementation and controls.(ÇB, 2002;113). 2 ISO 14001Environmental Management Standard covers environmental dimensions which institutions can hold in control and/or can affect herein. 320 �1st International Syposium on Sustainable Development, June 9-10 2009, Sarajevo City Sea Lake River Land Septic Others sewerage. tank Industrial wastewater discharged without 6.8 82.0 0.8 8.7 0.4 0.1 1.1 treatment Industrial wastewater discharged after 10.9 23.1 0.2 54.2 6.9 0.07 4.6 treatment Domestic wastewater discharged without 65.3 0.7 0.9 19.8 0.5 11.7 1.1 treatment Domestic wastewater discharged after 11.8 44.6 0.4 36.3 1.7 0.5 4.6 treatment Source;tüik.gov.tr Table 6. Amount of wastewater discharged to the receiving bodies by the status oftreatment and industry group 2004, (%) Waste water rates discharged according to industry group and treatment status can be gathered under four headlines.(Table 6). Out of these, first group consist ofindustrial waste water discharged treatment. Vast majority of waste water discharged from industry without treatment, namely 82 % of this, is generally discharged to seas. 8.7 % of remaining untreated waste wateris discharged rivers and 6.8 % ofitto city sewage. W hen we examine rates of industrial waste water discharged after treatment, itis seen thatthe highest rate is waste water discharged to rivers with 54.2 % rate. Rates oftreated waste water discharged respectivelyto sea (23 %) and city sewage (10.9 %) are in second and third sequence. In third and fourth group, we see Domestic wastewater discharged withouttreatment and Domestic wastewater discharged aftertreatment. Out ofthese,the highest rate in waste water discharged without treatment is discharged to city sewage with 65.8 % and to rivers with 19.8 %. The highestrate in domestic waste water dumped aftertreatmentis discharged to seas with 44.6 % and to rivers 36.8 %. Justlike inindustrialsolid wastes, maximal degree is dumped into surface water sources in waste water. Şehir kanalizasyonu Deniz Akarsu Diğer Figure 3.Industrial wastewater discharged withouttreatment Environmental pollution hasirrecoverable costs. Out ofthe factors causing this pollution,share of waste water discharged from industry withouttreatment undoubtedly substantial. As itis seen from Figure 3, dumping the said waste water mostly to seas is an indication of not reaching desired effective level of environmental management systems. Used in agricult ure 234 322 Used in productio n 245 131 Municipal dumping site 431 482 Open area Controlled Incinerati landfill on Dumpin g into rivers 4603 Other s (ton/ 347 705 087 101287 23738 year) 236 7 % 10.2 10.6 18.7 15.0 30.1 4.4 0.2 10.2 Source;tüik.gov.tr Table 7. Amount oftreatment sludge by disposal methods and industry group , 2004 Total 230653 5 Treatment sludge emerged as a result of waste water treatment apart from solid waste and waste water in industrial sectors can lead environmental pollution. As a matter of fact, amount of treatment sludge arising from treatment of industrial waste water in Turkey in 2004 is 2.3 million tonnes. Out of treatment sludge emerged inthe same dates, 30.1 % is disposed of by controllandfill,18.7 % by municipaldumping site, 15 % by open area, 10.2 % by agricultural usage (Table 7). 321 �1st International Syposium on Sustainable Development, June 9-10 2009, Sarajevo 1.3.Energy Consumption and Release Sources 14.2 % of electric energy consumed in Turkey is used in com mercial establishments, 23.7 % in residential houses, 3.6 % in government offices, 3.2 % in illumination of streets, more than 55 % in industrialsector (Table 8). Government Com mercial Residential Streetillumination Ind. Cons. Total offices And others. 4 662 719 18 543 784 30 934 976 4 142 988 71 978 292 130 262 759 % 3.6 % 14.2 % 23.7 % 3.2 % 55.3 Source; Tüik, 2006; 227 Table 8. Consumption of electricity-M Wh (2005) The highest value within energy rates which manufacturing industry consumes according to usage areas in 2005 has been reserved to production of goods and service with 69.1 %. (Table 9). When we examine other rates, 14.5 % of energy consumed isin coke oven, 11 % isin electricity generation. Production of goods and services Space heating Transportation Electricity generation Heat Coke oven/ production Blastfurnace Nonenergy use (TOE) 69.1 2.9 1.5 11.0 0.6 0.4 14.5 Source; Tüik, 2006; 227 Table 9. Total energy consumption by sectors and usage areas, 2005 (%) Turkey is a country which is under world average interms ofenergy consumption and meets substantial part of energy requirement via import. While per person consumed 1 808 k Wh in our country in 2004 (TÜĐK,2006;231), this amount was 2 292 k Wh in Belgium in 1998 and 3 520 k Wh in Finland (DĐE,2000;94). W hen we evaluate total energy sources, it is apparent that our primary energy sources are abundant and it is necessary to evaluate widespread lignite. However, evaluation of the said energy sources should be handled meticulously in terms of sustainable environment. Coal Lignite Fuel-oil Natural Gas Hydraulic Other (Motor Oil) 8.1 18.5 3.2 45.3 24.4 0.5 Source: TÜĐK,2006;227 Table 10.Thermal electricity generation by energy resources (106 k Wh), 2005, % W hen energy sources are taken into consideration, natural gas is in first row (45.3 %), hydraulic is in second row (24.4 %), and ligniteisinthird row (18.5 %).(Table 10). Rates of coal and fuel-oilare fairlylow. 90 % of demand of crude oil nowadays and 98 % demand of natural gas are met with import.Itis estimated that demand of crude oil of Turkey by 2020 shall be doubled and demand of natural gas shall be five folded. (Ç.B. 2002;107). When energy subjectis evaluated within approach ofindustry and sustainable development, domestic sources are notin alevel responding total energy demand of the country. Turkey needs a reliable energy regime. In parallel with increase of rate of natural gas in energy generation as to years, its share in energy generation increased and reached 9.2 % in 2000. However,when itis considered that Turkey supplies substantial part ofits energy from consumable sources,itis noticed that Turkey should orientto clean or renewable sources. It should not be disregarded that we should evaluate our existing energy sources in the best way in terms of sustainability and we should increase usage of renewable energy sources in an economical way. 322 �1st International Syposium on Sustainable Development, June 9-10 2009, Sarajevo Electricity Industry Transport Other production 2000 37.0 28.9 16.9 17.2 2004 34.3 30.7 18.2 16.8 Source; Tüik, 2006; 20 Table 11. CO2 emissions by sectors In industry, energy and energy costs affect the environment negatively by not obeying emission standards of energy sources besides being a very important problem. In Turkey, it is observed that CO2 emission, which used to be 223 806 thousand/ton in 2000, has risen up to 241 884 in 2004. In the same years, emission rates per person has increased from 3.32 to 3.40 (TUIK, 2006; 20). When the emission distribution rates of CO2 isrevised interms of sectors(Table 11),the emission which is distributed in 2004 has resulted from electricity production in 34.3%, industryin 30.7% and transportation in 16.8. The emission ratefrom other group including housing and agriculture, etc.is 18.2%. After beginning natural gas for heating purposes in large cities and in electricity production,there has been a decreasein emission ratesin both areas when compared with years 2000 and 2004. However,the emission ratesinindustry have risen up from 28.9% to 30.7%. After the publication of Air Pollution Regulation in 1986, positive developments have been attained in application. The emission rates resulting from industry are prevented to a large extent by natural gas transformation in industrial zones, widespread conscious of energy savings and heat conservation and heat recycle inindustrial chambers. 1991 1995 2000 2006 Energy 137.96 160.79 212.55 258.21 Industrial Processes 15.22 21.64 22.23 27.12 Agriculture 19.04 17.97 16.13 16.36 Waste 9.74 20.31 29.04 30.06 Total 181.96 220.72 279.96 331.7 Increase rates in 1990 7.0 29.8 64.6 95 Source:tüik.gov.tr Table 12. GHG emissions by sectors (million tonnes CO2 eq.) In spite of all measures taken, rapid urbanization and industrialization have led the waste amounts and other environmental problems to increase. As seen in Table 12, greenhouse gas ratesin Turkey have risen up so fast. In a research published by TUIK, year 1990 has been taken as a basis and increase percentages of greenhouse gas are calculated through this year. Thus,the increase rates have risen up to 7% in 1991, 29.8% in 1995, 64,6% in 2000 and 95% in 2006. 181 million tons of greenhouse gas emissions in 1991 have increased to 331 million tons in 2006. When the related table is revised, itis seen that the largest increase rate is made in wastes. For wastes, 9.7 million tons of greenhouse gas emission in 1991 has reached 30 million with a three times larger multiplication in 2006. In spite of measurementstaken in industry, greenhouse gas emission in this sector has risen up from 15 million tons to 27 million tons. W hen 1990-2005 Annual European Com munity Greenhouse Gas Inventory and 2007 Inventory Report are examined, AB-15: SG emissions have decreased to 1.5% between 1990 and 2005. Especially in 2004-2005, emission rates have decreased in such countries as Germany, Finland, Holland, Belgium, Denmark, France and England. Turkey is the 13th country by having the largest greenhouse gas emission in the world. Total greenhouse gas emission rateis approximately 1.3% in 2004. Kyoto Protocol has been valid in 174 countries since 2000 and approximately 60% of greenhouse gas emissions of these countries are involved. Therefore,the countries signing Kyoto Protocol will decrease 5% of greenhouse gas emissions in 1990 by putting several limitations for industrial organizations between 2008 and 2012. When this protocol is applied, 13 million tons of total greenhouse gas amounts in 1990 will be 12.7 million tons in 2012. 2. Industrial Wastes and Environmental Management W hen the purposes of 9th Development Plan (DPT, 2006) which will be applied in Turkey between 2007-2013, the focus is mainly on such decisions as taking responsibility of environmental protection and 323 �1st International Syposium on Sustainable Development, June 9-10 2009, Sarajevo environmental management by industrial organizations, using sources more efficiently and environmental management (article 518-519). Besides, when public policies of ninth development plan are examined,itis seen that maintaining sustainability in growth by revising industry-environment connections, making productions in accordance with human health and coherence and following social responsibility standards have been highly important. Since 1980,significant achievements are obtained interms ofair pollution and environmentalsources in our country. Although various problems are experienced in constructing sectoral policies and environmental management planning, 648 million TRY have been spent in total for environmental expenditures of production industry in 2007. When the distribution of expenditure is examined (Table 13),the largest rate is seen in waste water management (48%). 23.1% of thisrateis used in waste management and 12.7% for climate protection. Protectio n of ambient air and climate 12.7 Wastewater managemen t 48.0 Solid waste managemen t 23.1 Protection of soil and groundwate r 0.4 Noise and vibration abatemen t 0.3 Protection of biodiversit y and landscape 0.5 Research and developmen t 2.1 Other s 12.9 % Source:tüik.gov.tr Table 13. Environmental expenditure of manufacturing industry sector,(2007) The waste types and rates resulting from industrialization in Turkey are not quite different from other developing countries. Within certain intervals, TUIK publishes some data in order to determine amounts and distributions ofindustrial wastes and to take measurements accordingly. Moreover,the Ministry of Environment prepares industrial inventories for certain regions in determined periods. For instance, the detailed industrial inventory including Marmara,Mediterranean and Western Anatoliais one ofthose issued in 2002. Dangerous waste burn plant and regular storing plant of dangerous solid waste built within Đzmit Integrated Environmental Project operated by ĐZAYD AŞ as the most important infrastructure plant in order to diminish wastes resulting from industry. Apart from ĐZAY D AŞ having a 35 thousand tons dangerous solid burning capacity annually and operating aslicensed in our country does not have a licensed industrial waste burn and regular storing plant (Ç.B. 2002; 114-116). In recent years, temporary license certifications are given to some small-scaled plantations. However,legalinspection mechanisms are not effectively valid in these plantsin terms of quality of recycle materials and disposal of wastes. 3. Results and Suggestions Turkey’s involvement within customs union and EU membership process has been an impulsive force in terms of putting sustainability principles into action. Nonetheless, all measurements taken have not been enough. The amount of industrial solid waste in Turkey is 17.4 million tons, but only 46.9% of this rate is disposed of. The amount of dangerous solid wasteis yearly 70 thousand tons on average.Besides,the amount of waste water has reached 1.2 billion m3 in 2004 and only 33.7% ofit has been re-used and 64% has been leftinto nature without purification. The largestrates of waste water and solid wastes are determined to be disposed into seas or rivers. Turkey meets most of his energy need from importation. We are unable to use our present energy sources in full capacityin terms of sustainability. Most of CO2 emissions released results from industry in 30%. We are the 13th country in greenhouse gas emission in the world. In recent twenty years, there has been an increase of more than 90% in greenhouse gas emission. Turkey should primarily secure its sustainable use of naturalsources such as air,soil and water. It should also take measurements to decrease the effects of wastes and emissions on natural environment and re-arrange its regulations accordingly. States should be sensitive and supportive enough in terms of waste disposal costs of industrial organizations. In industrial organizations of Turkey, SMEs (small and medium sized entrepreneurs) play an important role. Especially in most of these,there are many infrastructure insufficiencies.In order to meet this need, states should construct stable policies and make substantialinvestments. Itis conditionalto have a proper system for disposal ofindustrial wastes and to increase the number of these plants. 324 �1st International Syposium on Sustainable Development, June 9-10 2009, Sarajevo Itis important to make investments and to take necessary precautions in order to use the cleanest and sustainable energy together with energy and energy costs used in industry. The uncertainty in economy should be dissolved in order to enable a sustainable development in terms of industry in our country. The determined policies will reach its aim thanks to absence of economical doubts and calculations in industrial environments. Unfair competition of business and industry environments working together peacefully with environment protection and sustainable development efforts and required enforcement should be applied. In this research, sustainable development is only tried to be described in terms of environment and Turkey’s present structure is explained. Yet, it should not be forgotten to take economical, social and environmental dimensions into consideration for sustainable developments of countries. Not only businessmen are responsible forthis, but also are productive sectors and citizens. Reference Ayvaz, R., 2004. Bozulan Doğal Denge Sonucunda Avrupa’daki Katı Atık Sorunlarına Çözüm Projeleri. Ekoloji (doğa-çevre ve kültür dergisi), Çevre Koruma ve Araştırma Vakfı, Sayı 4, Đzmir. Çevre Bakanlığı, 2002. Türkiye Ulusal Raporu (taslak). Sürdürülebilir Kalkınma Dünya Zirvesi Johannesburg 2002. DĐE, 2000. Sayılarla Türkiye ve Avrupa Birliği 1994-2000. Yayın No: 2516, Ankara. DPT, 2006 Dokuzuncu Beş yıllık Kalkınma Planı (2007-2013), Ankara. TÜĐK, 2006. Türkiye Đstatistik Yıllığı. Yayın No: 3063, Ankara. http://www.belgenet.com/arsiv/binyilzirve_02.html http://www.eea.europa.eu/publications/technical_report_2007_ http://www.ekolojimagazin.com/?s=magazin&id=126 325 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 494 Title A name given to the resource Relationship Of Environment-Industry In Sustainable Development Author Author Ünal, Çiğdem Karatop, Buket Abstract A summary of the resource. Thought of analysis necessity of environmental problems arising from production have become prevalent as a principal concern with onset of utilization concept of sustainable development in industry. Sustainable development has comprehensive dimensions as economical, environmental and cultural aspects. However, only dimension of environmentindustry of sustainable development has been handled in this study. Problems put forward within this relationship framework are industrial solid wastes, waste water, energy consumption and hazards which release sources give to environment. Amount of industrial solid waste of Turkey in 2004 is 17.4 million ton and out of this, only 7.7 % proportion part has been recycled, 46.9 % has been disposed of. These disposed solid wastes have been removed by pouring 47.2 % rate to seas, lakes and rivers. Rate of solid water released without treated in the same dates is 64.1 %. Industry has 30.7 % share in CO2 emission. In addition to this, amount of greenhouse gas emission shows increase in each year. Turkey requires more clean and renewable energy sources in terms of sustainable development. Date A point or period of time associated with an event in the lifecycle of the resource 2009-06 Keywords Keywords. Conference or Workshop Item PeerReviewed Q Science (General)