306 10 3494 https://omeka.ibu.edu.ba/files/original/9123b52f592d22cdba4b76ea944ddcb6.docx 8f6ab7892a761d4ff34cd4648f423806 https://omeka.ibu.edu.ba/files/original/6fdbfdffbce700e9cbdcb0856c1e46f6.pdf cf69af2c6ef1fa79e3cbd4ec2f4b4bf6 PDF Text Text The Role of Middlemenin Economy: are they Redundant or Important? SerkanDilek Kastamonu University Turkey serkan.dilek@gmail.com Abstract: In economic theory producers (firms) compete to satisfy the needs of consumers and on this way try to get maximum amount of profits. Consumers generally try to choose the cheapest and the one with highest quality to maximize their utility. In addition to this, producers try to sell their goods with highest price to maximize their profits. In perfect competitive markets it is assumed that both producers and consumers have perfect information about prices. However, in daily life they cannot have all information without searching and suffering from transaction costs. Also sometimes consumers cannot find firms that produce the goods they need. They need help to find firms that sell goods for them. Middlemen are agents who help consumers and also producers to meet each other. For instance, real estate managers, dating clubs, travel agencies are that kind of agents. These are thought to be agents who reduce transaction costs and by this way help providing equilibrium of markets. But, middlemen have not enough space in economy books and there is so little search in literature. If they have important place in economic life why there is so little search about them in literature? If they are redundant why most of consumers go to real estate’s to find appropriate flats, lands, offices etc for them? In this study the place and importance of middlemen in economic life is discussed. First economic literature about middlemen and their roles in market are reviewed. Then, it is tried to reveal their role in reducing transaction costs and providing economic equilibrium. To this aim a model consists of firm, consumer and middlemen is constructed. By the help of this model we can answer (or at least discuss) if intermediaries are redundant or important factor in economic life. This study can help for future researches about the role of middlemen in economic life and by this way middlemen will gain rightful place in economic theory and literature. Keywords: Intermediaries, Middlemen. Imperfect Information, Transaction Costs, Information, 71 � 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. 2506 Title A name given to the resource The Role of Middle men in Economy: are they Redundant or Important? Author Author DILEK, Serkan Abstract A summary of the resource. In economic theory producers (firms) compete to satisfy the needs of consumers and on this way try to get maximum amount of profits. Consumers generally try to choose the cheapest and the one with highest quality to maximize their utility. In addition to this, producers try to sell their goods with highest price to maximize their profits. In perfect competitive markets it is assumed that both producers and consumers have perfect information about prices. However, in daily life they cannot have all information without searching and suffering from transaction costs. Also sometimes consumers cannot find firms that produce the goods they need. They need help to find firms that sell goods for them. Middlemen are agents who help consumers and also producers to meet each other. For instance, real estate managers, dating clubs, travel agencies are that kind of agents. These are thought to be agents who reduce transaction costs and by this way help providing equilibrium of markets. But, middlemen have not enough space in economy books and there is so little search in literature. If they have important place in economic life why there is so little search about them in literature? If they are redundant why most of consumers go to real estate’s to find appropriate flats, lands, offices etc for them? In this study the place and importance of middlemen in economic life is discussed. First economic literature about middlemen and their roles in market are reviewed. Then, it is tried to reveal their role in reducing transaction costs and providing economic equilibrium. To this aim a model consists of firm, consumer and middlemen is constructed. By the help of this model we can answer (or at least discuss) if intermediaries are redundant or important factor in economic life. This study can help for future researches about the role of middlemen in economic life and by this way middlemen will gain rightful place in economic theory and literature. Keywords: Intermediaries, Imperfect Information, Transaction Costs, Information, Middlemen. 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 2014-04-24 Keywords Keywords. Article PeerReviewed Identifier An unambiguous reference to the resource within a given context ISSN 2303-4564 H Social Sciences (General) https://omeka.ibu.edu.ba/files/original/8d4e830a2ab1dc26b6184a416dba1964.pdf 6bb19362bc54cb06b7e48181f3b333ad PDF Text Text The Role of Mining in Development of Railways in Turkey Ünal ÖZDEMİR Atatürk University, Kazim Karabekir Education Faculty Erzurum/Turkey uozdemir@atauni.edu.tr Abstract: Increase of mass production, which is an important indication of Industrial Revolution, requires a change in transportation method. Particularly, railways made it possible to transfer iron and coal ores produced in the central part of Turkey to the ports and plants on the costal towns and cities. This made railways a strong rival to the waterways (rivers and sea ways) and roads. This fast and reliable new transportation also affected the Ottoman Government. The railway transportation, which had been started with the help of western companies due to the economic difficulties, has gained acceleration with the start of Republican period. At this context, together with nationalization of current railways, new railways were also constructed to improve transportation inside the country with military, political and economic aims. Reaching to the mine reserves inside the country and transporting them to the plants were among the aims of constructing railways. The new routes of railways which were sloganised as reaching coal, reaching iron, reaching copper were played an important role in development of Turkish railways. In this study, the role of mining in development of railways in Turkey was investigated with a geographical perspective. Keywords: Turkey, transportation, railways, mining Introduction Industrial Revolution was not only a processes that lead a new means of production but also brought about a considerable change in social, economic, and communal life. One of the areas in which these changes were felt strongest was the transportation sector. The new means of production required a large amount of row materials to be transported to the production facilities on one hand; and the products to market places on the other. The main means of transportation were waterways and inland roads. For the first time a new means of transportation was felt with the mass production of Industrial Revolution and it did not take a long to time for a new competitor to come about. The new competitor was the railroad. The railways are of special importance when it comes to long-distance transportation of goods and products. When the industrial and trade issues are considered, no other means of transportation can carry that mass amount of goods in a considerable short time with a reasonable price except for the waterways (Barda, 1964: 137). Therefore together with new urban areas, the railway was the external symbol of Industrial Revolution (Hobsbawm, 1995: 229). The first railways were made of wooden bars, and the cars were made of wood as well. These were used in Bath mines and coal extraction places in Cornwall in the 17th century (Braudel, 2004: 508). The first regular railway line was built between Stockton and Darlington in 1825 and used to transport the coal. The first railroad line in France, the one from St. Etienne to Roan was built in 1832 and used to carry coal and iron ore (Tümertekin, Özgüç, 1999: 594). This easy transportation of heavy material through railways lead the construction of railways first in England and the new innovation spread through a number of other parts of the world notably in Western Europe, the United States and Russia. The diffusion of this new technology was spread to the Ottoman Empire and the Ottoman bureaucrats considered the rail roads as the solution to transportation within the large territory of the Empire. The railroads were considered important for not just transportation of commercial material but also for military and political reasons (Yıldırım, 2001: 5). However, due to financial difficulties, the construction of railroads was relegated to Western companies in return for operating rights for a certain period of time. In fact, the underlining motivation for the Ottomans and for the Western companies was not the same. The railroads were means of reinforcement of exploitation of the Ottoman economy resource base. That way, especially the agricultural products of fertile Aegean plains and Cukurova to the east, and other row materials would be carried to the European market. With that motivation in mind, the first railroad line in the Ottoman Empire was built between Izmir and Aydin in 1856. Although the colonialist intensions of Western countries were mentioned about the first railroads in Ottoman Empire, these railroads, no doubt that, helped to make a radical change in the traditional production 16 �methods and helped the economical development in a considerable manner (Gürbüz, 1999: 180-181). It was only after the establishment of these new railroads that the large geographical regions in Anatolia besides the Aegean and Marmara Regions that have the advantage of using marine transportation got the opportunity of cheap transportation of goods and this had changed the means of transportation in a fundamental way (Zarakolu, 1950: 573). These first initiatives by investment of the British, German, and French companies provided a railroad web of 4 100 kms for the young Republic. This was an important infrastructure and experience for the Republic. The Republic of Turkey, lead by Atatürk, had a number of projects with a purpose much different than the previous period: The priority would be given to railroads that would encourage the extraction of mines in different part of the country. Railways in the Republican Period With the aim of developing the country, the Republican government decided in the Izmir Economic Congress that as the most reliable and secure transportation method, the construction of railroads would be given priority (Ünsal, 1983:187). Different form the previous period, all railways construction was undertaken by the government as opposed to foreign companies. This is the most notable difference between the republican railways and the Ottoman railways (Barda, 1964: 188). The railway construction policy of the Republic developed in two different ways. The first one was to construct new railways that would support the development of other sectors in the newly established country; the second one was to buy the railroads built and managed by the foreign companies (Yıldırım, 2001: 40). The first Republican governments put a special emphasis on developing the coal and mine industry and this was emphasized in the first and second Industrial plans that covered a five year period each starting from 1933. The government officials thought that developing these kinds of industry was dependent upon a well established railway network because it was the most reliable and cheap means of carrying goods and products to and from markets. The officials developed slogans like reaching to coal (Zonguldak-Irmak), reaching to copper (Adana-Fevzipaşa-Ergani), reaching to iron (Sivas-Malatya), reaching to chrome (Kütahya-Balıkesir). These slogans helped to construct new railway networks in different parts of the country. These railways were not planned as a network covering the whole country but planned as connecting lines of important mining areas. This is in fact an indication of the importance of mining activities in developing the railway network in Turkey. In this research we will look at the development of Republican railways in two different periods: pre1950 period and after 1950 period. The reason for distinction is that the government decided to employ a policy that favoured to motorways over railroads under the Marshall Plan. In the Republican Period a network of 5 515 kms of railways was built. Almost 70 % (3877 kms) of them was built between the 1925-1950 periods, 29 % (1638 kms) was built between 1950- 2000 period. The length of the railways built in the first period more than doubled the railways built in the second period (see figure 1 and 2). The main reason in explaining that difference is the fact that the transportation policy changed radically to prioritize roads over railroads. Only a limited amount of railroads were built in the second period even for mining activities. This number was over 1 000 kms in the first period and it declined ever below 50 kms in the second period. Period Railroad built (km) Mining lines built (km) Percent 1925-1950 3 877 1 093 28.2 1951-2000 1 638 42 2.5 TOTAL 5 515 1 135 20.5 Table 1: Railroad construction in the republican period (1925-2000). Source. Republic of Turkey, State Railroads Company Statistics. When we continue analysing the railroads built with the purpose of mining, we notice that almost all lines with a mining purpose were either built or were in construction phase in 1932-1933. When we look at the Figure 1, we notice that a good proportion of coal line (Irmak-Filyos), copper line (Fevzipaşa-Malatya-Ergani) and chrome line (Kütahya-Balıkesir) were constructed. Despite this early undertaking, the iron line between Malatya and Sivas was not built yet at that time. 17 �Figure 1: Railroad network in Turkey, 1931. (Source: İsveç-Danimarka Grubu, 1931). Figure 2: Railroad network in Turkey, 2008. (Source: TCDD). From the establishment of the Republic up until 1932, with the purpose of extracting mines 493 kms of railroad was built. This was the 28 % of the whole railroads which was 1751 kms built in the same period (Table 2). This means that 850 meters of every 3 000 meters of railroads was built for mine extracting. One of the lines built in that period was Irmak-Filyos Railroads. Called the coal line, this railroad would connect by following the Filyos valley the Zongludak-Ereğli coal basin to Karabük Iron-Steel Factory and to Ankara. The traffic got busy in this line when the line was connected to the iron line. The iron line following the city centers of Malatya, Sivas, and Kayseri, connected the iron ore located in Malatya and Sivas provinces in the central and east Anatolia to the Irmak-Filyos coal line. With these connections it was possible to transport and process the coal of Zonguldak and iron of Malatya and Sivas to the iron-steel factories in Karabük. The Irmak-Filyos line was built by a Sweden-Denmark joint group and the group was working on another project at the same time. This new line was Fevzipaşa-Malatya-Ergani. Ergani has one of the oldest copper processing factories in Turkey. With the construction of this line it was possible to connect the copper valley the Mediterranean ports of Mersin and Iskenderun. Another line built at that time was Kütahya-Balıkesir Line. With the construction of this Chrome line, the chrome extraction of Turkey, which has a considerable proportion of the chrome reserves, reached an important level. 18 �Mine Chrome Copper Chrome Coal Chrome Copper Copper Coal Copper Coal Coal Iron Iron Iron Coal Lignite Coal Coal (closed) Lignite Total Name of the Line Kütahya-Emirler Fevzipaşa-Gölbaşı Emirler-Balıköy Irmak-Çankırı Balıköy-Balıkesir Fırat-Yolçatı-Elazığ Yolçatı- Maden Atkaracalar - Ortaköy Maden - Diyarbakır Bolkuş-Hisarönü Hisarönü-Çatalağzı Yazıhan-Hekimhan Çetinkaya-Divriği Hekimhan-Çetinkaya Çatalağzı-Zonguldak Tavşanlı-Tunçbilek Zonguldak - Kozlu Kozlu-Ereğli-Armutçuk Kütahya-Seyitömer Opening date 1929 1929 1930 1931 1932 1934 1935 1935 1935 1936 1936 1936 1937 1937 1937 1944 1945 1953 1962 Length (kms) 64 138 36 102 153 86 76 56 83 86 15 37 65 70 10 13 4 15 26 1 135 Table 2: The Mining railroads built during the republican period. (Source. Republic of Turkey, State Railroads Company Statistics, 2008). Eregli Iron and Steel Factory was established with the aim of producing the steel need for industry domestically in 1965. The steel was imported before that time. However, because the railway line reaching Kozlu could not be connected to Eregli because of geographical obstacles, the iron ore could not be able to be carried with through same line. Since the 26 kms long Kozlu-Armutcuk line could not be constructed, a new project called train ferry was developed. With this new project, the iron ore used in Eregli Iron and Steel Factory was carried with ferries through the sea from Zonguldak to Eregli. We need to note here that although mining related activities did not play an important role in the establishment of some early railway lines, some of these lines demonstrated an increased traffic in the following years. Examples for these lines are: iron ore in Sivas-Kayseri-Irmak line; boron in Balikesir-Bandirma line; chrome in Erzurum-Erzincan-Kayseri line; manganese and chrome in Irmak-Filyos line; lignite in Sivas-Samsun line. The point I want to emphasize here is that there were enough goods to manage these lines economically and without the mine transportation that would not have been possible at all. According to State Railroads Company’s Statistics, only some 5 percent of all goods were carried by railroads in Turkey in 2005. This percentage was 3 in Bosnia &Herzegovina, 11 in England, 12 in Italy, 18 in France, and 20 in Germany. Some other countries carry most of their goods through railroads and Slovakia with a percentage of 61, Switzerland with a percentage of 98 lead these countries (Table 3). It is important to note here that mines constitute 46 percent of all goods carried by railroads in Turkey (www.tcdd.org.tr/2005). This percent does not include metallurgic products. This point demonstrates clearly how important is the mining sector for the management of the railroad network. Country Percent carried by railroad Switzerland Slovakia Bulgaria Czech Rep. Austria Romania Hungary 97.9 61.4 48.1 47.0 46.7 40.0 36.1 Country Belgium Germany France Italy England Turkey Bosnia &Herzegovina Percent carried by railroad 22.7 19.9 17.8 12.3 11.1 5.5 3.7 Table 3: Transportation of goods by railroads in some European countries, 2005. (Source: UIC Statistics and European Union Transportation and Energy Statistics, 2005). 19 �Conclusion Although the first railroads were constructed by foreign company investments in the Ottoman Empire, the railroads had special meaning for young Republic. Railroads were considered to be a milestone in the economical and social development of the country that just came out of heavy warfare and faced the heavy burden brought by the wars. This vision was realized soon and as pointed out in some republican marches, the country were started to be woven with iron network by the tenth year celebrations of the young Republic. The newly established railroads, on one hand, helped to develop industry and commerce, and connected the interior of the Anatolia to the costal cities and towns. However, the new transportation policy put in effect in 1950 adversely affected the railroad construction. The new policy favoured inland motor roads, ignoring the need to modernize and maintain the old railroad lines. Thus the railroad lines that have been built since the Ottoman times left clumsy and without maintenance. In this period, no new lines were planned and the transportation of mines done increasingly by motor roads. In fact the transportation of mines with roads should have been integrated with railroads. In this case, the 90 percent share of motor roads today would have been kept in a certain level and a more environment friendly and more economic alternative, railroads, would have maintain its importance. References Barda, S. (1964). Münakale Ekonomisi. Istanbul Üniv. Yay. No: 1089. İktisat Fak. Yay. No: 154. Istanbul. Braudel, F. (2004). (Çev: Kılıçbay, M.A), Maddi Uygarlık. Dünyanın Zamanı. İmge Kitabevi, Ankara. Gürbüz, A.K. (1999). Osmanlı İmparatorluğu’nda Demiryollarının Rolü. Balıkesir Üniversitesi Sosyal Bilimler Enstitüsü Dergisi, 2 (3), 169-193. Hobsbawm, E. (1995). Sermaye Çağı 1848-1875. Dost Kitabevi. Ankara. İsveç-Danimarka Grubu, (1931). Fevzipaşa-Malatya-Diyarbakır ve Irmak-Çankırı-Filyos Demiryolları İnşaatı. Tümertekin, E., & Özgüç, N. (1999). Ekonomik Coğrafya. Çantay Kitabevi, İstanbul. Ünsal, Y. (1983). Askeri Strateji Açısından Türkiye’deki Demiryolları (1856-1923). Birinci Askeri Tarih Semineri Bildiriler II.,1983, VA:179-187. Yıldırım, İ. (2001). Cumhuriyet Döneminde Demiryolları (1923-1950). Atatürk Kültür, Dil ve Tarih Yüksek Kurumu. Atatürk Araştırma Merkezi Yay. Ankara. Zarakolu, A. (1950). Memleketimizde Demiryolu Politikası. Ankara Üniv. Hukuk Fak. Dergisi, 573-589. http//www.mta.gov.tr (25 April 2009) http// www.tcdd.org.tr/2005 (01 May 2009) http// www.tcdd.org.tr/2008 (01 May 2009) 20 � 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. 643 Title A name given to the resource The Role of Mining in Development of Railways in Turkey Author Author ÖZDEMİR, Ünal Abstract A summary of the resource. Increase of mass production, which is an important indication of Industrial Revolution, requires a change in transportation method. Particularly, railways made it possible to transfer iron and coal ores produced in the central part of Turkey to the ports and plants on the costal towns and cities. This made railways a strong rival to the waterways (rivers and sea ways) and roads. This fast and reliable new transportation also affected the Ottoman Government. The railway transportation, which had been started with the help of western companies due to the economic difficulties, has gained acceleration with the start of Republican period. At this context, together with nationalization of current railways, new railways were also constructed to improve transportation inside the country with military, political and economic aims. Reaching to the mine reserves inside the country and transporting them to the plants were among the aims of constructing railways. The new routes of railways which were sloganised as reaching coal, reaching iron, reaching copper were played an important role in development of Turkish railways. In this study, the role of mining in development of railways in Turkey was investigated with a geographical perspective. 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) https://omeka.ibu.edu.ba/files/original/a9db924d3f2bae61844c7883d8f7fa00.pdf 03c148e18c679765c0ebeebcc008b1da PDF Text Text Journal of Economic and Social Studies The Role of Monetary Policy as the Foundation of Economic Development in Bosnia and Herzegovina Matej Živković International Burch University Bosnia and Herzegovina mat.zivko@gmail.com Lejla Hodžić Sarajevo School of Science and Technology Bosnia and Herzegovina lejla.hodzic@stu.ssst.edu.ba Abstract: Macroeconomic stabilization of every country depends largely upon the conduct of appropriate economic policy, which comprises both fiscal and monetary policy; therefore, it is of great importance to choose the most adequate and productive ones. Many countries across the board have employed monetary policy in their attempt to ease the consequences of economic crises in the aftermath of global financial meltdown, and in the search for sustainable economic development. This paper was confined to the monetary policy in Bosnia and Herzegovina specifically, and its aim was to address the current Currency Board Regime along with the available monetary policy instruments and to determine whether an opportunity for the improvement of economic growth and consequently economic development lies within it. The importance of Central Bank was stressed out, as it represents the anchor of the monetary system. The paper comprises the analysis of the implemented CBR, its brief history, monetary policy instruments available and its consequences on the economy of B&H and based on that, the recommendations for exit-strategy which, ceteris paribus, represent a key to achieving higher levels of development. The economic indicators suggested that macroeconomic performance under CBA is not advantageous for B&H; therefore, it is thought that abandoning the arrangement either by joining the EMU or by making the Central Bank more independent is necessary. Volume 6 Number 1 Spring 2015 Keywords: Macroeconomic Stabilization Monetary Policy Instruments;B&H Currency Board Regime; Economic Development; Monetary Easing JEL Classification: E52, O160 Article History Submitted: 11 June 2015 Resubmitted: 22 September 2015 Resubmitted: 20 October 2015 Accepted: 4 November 2015 http://dx.doi.org/10.14706/JECO SS16615 25 �Matej Živković, Lejla Hodžić Introduction Every country, in order to achieve macroeconomic stability, full employment and improved living standards for its citizens, faster economic growth and consequentially economic developmentneeds to conduct appropriate economic policy. Government has three instruments to achieve objectives of economic policies in a certain nation, namely investments, direct government and by state owned enterprises, as well as fiscal and monetary policy. An important part of every country’s economic policy is therefore monetary policy, whose aim is, by influencing the availability of credit and cost, tostabilize the prices, exchange rate and amount of money in circulation, to control inflation and maintain equilibrium of balance of payments. Monetary policy actions need to adjust to changes in the financial systems of countries, which happen regularly. Therefore, the model of managing the monetary policy has to be chosen with a lot of care. The use, influence and objectives of monetary policy have changed in the aftermath of the global financial crises and consequent global recession. One of the heritages of the seventies was the fear of high inflation that devours the value of everything in a single economy. This fear was multiplied in countries of the region by hyperinflation of the eighties. The terror of inflation has the left much of the world with the primary concern with general increase of prices for monetary policy. However global crises caused triggering the concept of easy money through what was later called monetary easing, with primary goal of revitalizing stumbled economic activities without any fear of overheating the economy with possible inflation. The paradigm has hence changed; monetary policy no longer targets levels of price at least not as its primary concern, but unemployment and other economic malaise produced by economic crises and attempts to assist together with other instruments of economic policy in achieving economic development. The subject of this paper is the monetary policy and its instruments, especially in Bosnia and Herzegovina, and it being the potential for achieving economic development. Throughout the paper, the importance of Central Bank will be highlighted as it represents the pillar of monetary system and is the holder of monetary policy. The method which will be used to serve the aim of the paper is a combination of modelling method, inductive method and Delphi method. 26 Journal of Economic and Social Studies �The Role of Monetary Policy as the Foundation of Economic Development in Bosnia and Herzegovina Furthermore, the task of the paper is to address the Currency Board and to present possible changes in monetary policy that potentially could be the key to achieving faster growth and enabling the country to become economically stable. Literature review The topic of Currency Board Arrangement (CBA) has been used as a main research topic for many years, since many countries, at either same time or at different points in time, have experienced currency fluctuations and consequently financial instability and since currency boards have been existing for more than 150 years. The CBA was also the cover topic of most prominent economic newspapers, including The Economist. The most prominent study of currency boards was by Hanke and Schuler (1994) who provided with a comparison of currency boards versus central bank regime, highlighting benefits and disadvantages of each. Comparative statistics and formal econometric analysis of Gosh, Gulde and Wolf (1998) confirmed that, historically, currency board arrangements have achieved better performance and better results than any other fixed exchange rate regime (Fabris & Rodić, 2013). In addition, it has been found, through statistical and econometric analysis of Gulde, Julia and Keller in 2000, that the performance of inflation has been significantly better, meaning lower, and higher growth has been achieved under currency boards than under floating exchange rate regimes (Gulde, Julia, & Keller, 2000). Holger C. Wolf in his book “Currency Boards in Retrospect and Prospect” gave a synthesis of many different studies on this topic, focusing on the early forms of currency boards, the example of Argentina, stating that its disinflation success could be because of the CBA, but at the same time the CBA, with the lack of fiscal discipline, was the cause for financial crisis that happened afterwards. The third part of the book was devoted to explaining the most recent currency boards, including B&H’s CBA as the youngest, i.e. the last one implemented. It has been argued that despite different reasons for its implementation, European currency boards had the same objective of eventually abandoning it in order to be accepted into Eurozone membership (2008). As regards to the CBA in B&H topic, not much literature is available. The former Governor of the Central Bank B&H Kemal Kozarić presented an overview of the monetary policy regimes, with the review of the CBA currently implemented, and thereby stressing its advantages out (Kozarić, 2007). In addition, both Kovačević Dragan and Ivona Kristić have the same view on the effects of CBA on B&H’s economy, thereby emphasizing the stability achieved with the fixation of local currency. However, other literature, including the paper “Understanding of the Currency Board System in Bosnia and Herzegovina” by Ferizović Mersud and Volume 6 Number 1 Spring 2016 27 �Matej Živković, Lejla Hodžić Ferizović Naida accentuate that CBA has been beneficial in the immediate postwar period for B&H, but however it needs to be restructured so that the increased competitiveness of the country can be achieved. Current Monetary Policy of B&H: The Currency Board Regime (CBR) Bosnia and Herzegovina has the Currency Board implemented as the monetary policy regime, and it limits the authorities of the Central Bank. Currency Board is an arrangement in which the domestic currency is with a fixed exchange rate tied to another currency which represents the “Anchor”, gold or to a basket of currencies where all the money in circulation can be freely converted into reserve currency and where the functioning of the Central Bank is clearly prescribed by the Law on the Central Bank. Currency Board functions by the rules of passive monetary policy and it lacks the ability of implementing basic monetary policy instruments. However, it is known by its simplicity, transparency and precise rules (Kozarić, 2007). Brief History of the Currency Board in B&H Establishment of the Currency Board was built as Annex 4: Constitution into the Dayton Peace Agreement, which was initiated and concluded in Dayton, Ohio, United States on 21st November 1995 and it was officially signed 14th December 1995 in Paris (Fabris & Rodić, 2013). Article VII of the Constitution appointed Central Bank of Bosnia and Herzegovina (CBBH) as the only authority for conducting monetary policy throughout Bosnia and Herzegovina and with the approval to issue currency. In addition, it is stated that only Parliamentary Assembly could give the authority to Central Bank to extend credit by crating money, but only after six years since the adoption of the Constitution pass (OHR, 1995). Main motivation behind the implementation of Currency Board was the complex political situation in B&H, which made decision-making on political issues, on a single level, very difficult (Kozarić, 2007). Moreover, other reasons that contributed for adoption of such regime were: great division of the society, two entities and four currencies in circulation: Yugoslav Dinar, Croatian Kuna, Bosnian Dinar and German Mark. 28 Journal of Economic and Social Studies �The Role of Monetary Policy as the Foundation of Economic Development in Bosnia and Herzegovina However, Currency Board, as a model of managing the monetary policy, was not immediately adopted, because the Bosnia and Herzegovina was in a transition period from war to peacetime economy, from planned to market economy and from the status of the former Yugoslav Republic to an independent state with its monetary sovereignty, territorial integrity and political independence, which took time to happen (Kovačević, 2003). Therefore, the implementation occurred on 20th June 1997 under the assistance of International Monetary Fund (IMF), when the Central Bank of Bosnia and Herzegovina was established. In addition, the Convertible Mark (KM) was formed as a domestic currency, which was convertible on demand first into Deutsche Mark and after the adoption of Euro, into Euro (Gedeon, 2009). The fixed exchange rate by which KM was converted into Deutsche Mark and is now converted into Euro is set by the Law on the Central Bank of B&H. Article 32 of that Law states that the official exchange rate for the currency of Bosnia and Herzegovina is going to be one Convertible Mark per Deutsche Mark, or as of 1st January 2001, KM is pegged to the Euro at the exchange rate: one Convertible Mark for 0.511292 Euro, or one Euro for 1.955830 Convertible Marks (CBBH, 2002). The KM exchange rate against its anchor currency has not been altered since when it was first set by Law in 1997, and it is fixed nominal variable which influences inflationary expectations of the public (Centralna Banka Bosne i Herzegovine, 2015). The fixed exchange rate was important for the implementation of Currency Board, since its aim was to ensure economic stability in an extremely disordered postwar economic environment for Bosnia and Herzegovina, by providing solid nominal exchange rate of the domestic currency and by establishing the credibility of the Central Bank. Main Elements of the Currency Board Currency Board in B&H is very transparent and is characterized by four main elements: automatism, convertibility of the domestic currency, political and financial stability and credibility. Automatism refers to endogeneity of money supply and the self-regulation of monetary system. It is thought that domestic money supply is going to endogenously adjust to changes in the balance of payments (BoP), which represents imitation of self-regulatory mechanism of the gold standard. Moreover, convertibility of the domestic currency means that the domestic currency is always ready to be exchanged for the anchor foreign currency at a fixed exchange rate, and also for other foreign currencies as well. In addition, KM is fully backed up Volume 6 Number 1 Spring 2016 29 �Matej Živković, Lejla Hodžić by foreign assets reserves. Therefore, any increase in the money supply can be solely provided by increasing reserve currency in the same amount. This means that the Central Bank needs to hold reserves, which are high-quality, interest-bearing securities denominated in reserve currency, of at least 100% as set by Law; however, the Bank usually holds 105-110% as to be protected in the case of interest-bearing securities losing value. Figure 1. Coverage of Monetary Liabilities with Net Foreign Exchange Reserves. Source: CBBH Figure 1 represents the coverage of monetary liabilities with net foreign exchange reserves in the period from 2009 to 2013. During the period, the rule that net foreign exchange reserves, which include foreign currencies, gold or securities issued abroad and denominated in foreign currency less foreign liabilities of CBBH, need at all times to fully cover monetary liabilities in Convertible Marks, which include all bills and coins in circulation, the balances in commercial banks’ reserve accounts and other deposits with the CBBH, has been respected. The coverage in 2013 was approximately 106%. Since the Central Bank under CBR cannot create inflation, is protected from political pressures, makes interest rates to be lower and provides currency stability, the Currency Board Arrangement (CBA) establishes political and financial stability of the country. In the case of Bosnia and Herzegovina, it imports monetary policy from the European Central Bank, and interest rates as well as inflation closely track those in the anchor country. 30 Journal of Economic and Social Studies �The Role of Monetary Policy as the Foundation of Economic Development in Bosnia and Herzegovina However, Currency Board, although an efficient measure for stabilizing the level of inflation in short-term, limits monetary authorities to finance budget deficit and their possibilities to give support to banks that have liquidity problems. Therefore, the Central Bank of B&H could not and still cannot act as “lender of last resort” and cannot use the exchange rate as means for recovery from economic shocks (Savić & Savić, 2011). Monetary Policy Instruments of CBBH As stated in the Law on the CBBH a under chapter IV on Monetary Functions and Operations of the Central Bank, The CBBH is not allowed to engage in any money market operations which involve securities of any type (Monetary Functions and Operations of the Central Bank, 1997). In addition, it takes over the monetary policy of the European Central Bank and acts as a passive agent in order to achieve its primary task of obtaining the stability of EURO-KM parity. However, the Central Bank of Bosnia and Herzegovina has one monetaryinstrument available to carry out economic policy goals and influence monetary movements, and that is the level of required reserves. The Governing Board of the Central Bank requires that banks hold the deposits with the Central Bank at minimum level of between ten and fifteen percent of their deposits and borrowed funds. Required reserves are calculated as average daily reserves over ten days period. Moreover, the amount of funds in the reserve account with the CBBH determines the amount of money in circulation. The first time that CBBH used mandatory reserves as monetary policy instrument was in June 2003, when it decreased required reserve rate from 10% to 5%. However, in the next year the CBBH increased the rate up to 7.5% in September and to 10% in December and kept increasing it in order to eliminate high current account deficit as well as high credit growth (Kristić, 2007). Furthermore, since the effects of global financial crisis were also felt in B&H banking sector in 2008 and 2009, especially in terms of banking sector liquidity, the CBBH Governing Board decreased the required reserve rate from 18% to 14% in late 2008, and again it was reduced in 2009 to 10% for liabilities with a maturity over one year aiming to improve overall liquidity and economic activity by encouraging lending (CBBH, 2009). In 2010 the rates did not change; however, in 2011 the required reserve rate for maturities over one year was reduced to 7% as well as the required reserve rate for maturities up to one year, which then was set at 10%. From the base for calculating reserve requirement the value of government deposits for calculating development projects was excluded. Moreover, during 2011 significant loosening happened, which created conditions for monetary expansion (CBBH, 2011). Volume 6 Number 1 Spring 2016 31 �Matej Živković, Lejla Hodžić Figure 2. Quarterly Changes in Bank Liabilities and Reserve Account with the CBBH. Source: CBBH Figure 2 above represents the changes in reserve account, resident deposits and liabilities to non-resident over the 5 year period. It can be observed that deposits by residents have increased significantly as an aftermath of the growing public debt, whereas liabilities to non-resident have been reduced. In 2013, when B&H’s economy experienced slight recovery from previous shocks, the base for calculating reserve requirement has been raised, and the surplus funds held with the CBBH that exceed the required reserve were also increasing (CBBH, 2013). Selected Economic Indicators in B&H under the CBR As previously mentioned, Currency Board Arrangement has roots in classical paradigm and it is assumed that domestic money supply adapts endogenously to changes in the balance of payments, meaning that maintenance of financial equilibrium and restoration of full employment and the balance of payments occurs through self-adjustment of national price level and the free flow of specie. It is thought that when consumers trade domestic for foreign currencies, the current account deficit will reduce the monetary base. This further causes an increase in the interest rates, a decline in the aggregate demand and a depreciation of the real exchange rate. The contraction in the money supply also reduces labor demand and the demand for other factors of production and that in turn reduces country’s prices relative to other prices (Gedeon, 2010). This indicates that macroeconomic performance under CBR is not beneficial for the development of B&H. 32 Journal of Economic and Social Studies �The Role of Monetary Policy as the Foundation of Economic Development in Bosnia and Herzegovina Recent data suggests that economic activity in B&H modestly continued to increase; however the growth in 2013 was very low and it counted almost 1 percent, which can be observed in Figure 3. Because of the limitations of the CBR, and the Central Banks’ inability to act as a “lender of last resort” and to influence the exchange rate, the growth in 2014 was projected by the IMF at around 2%, but based on the unofficial data it is even smaller than in 2013, namely 0.7% (International Monetary Fund, 2014). Figure 3: Real GDP Growth (in percent). Source: IMF Furthermore, the current account balance remains negative throughout the years, reflecting the fact that Bosnia and Herzegovina, because being unable to print money on its own and collect revenues through open market operations, is net borrower from the rest of the World, especially from the IMF. The negative current account balance can be seen in the figure below(International Monetary Fund, 2014). Volume 6 Number 1 Spring 2016 33 �Matej Živković, Lejla Hodžić Figure 4: Current Account Balance (in percent of GDP). Source: IMF Figure 5 is a graphical representation of the official and estimated core inflation, measured by the consumer price index, in the period from 2006 to 2013. The data was extracted from CBBH reports, with the cooperation of Bosnian Agency for Statistics (BHAS). Fluctuations in the official inflation can be observed; however, from 2011 slowdown trend in inflation is present due to the deflationary pressures. In 2013, Bosnia and Herzegovina experienced deflation; although, because of the low purchasing power of consumers, domestic demand was very weak. Monetary Policy as the Key Foundation for Economic Development in B&H Although the Currency Board Regime provides financial as well as political stability to the country by prohibiting the interference of the politicians and by curbing the inflation, it is at the same time disadvantageous for Bosnia and Herzegovina. Its benefits and efficiency could be seen in the period since its introduction; however, after continuous implementation of this arrangement researchers concluded that it is extremely harmful for the country since it leads to overvaluation of the domestic currency and the current account deficit is double that of countries with floating exchange rates (Fabris & Rodić, 2013). In addition, it does not give the authority to the Central Bank over monetary policy instruments, except for the required reserves. The present deflation is beneficial neither for the suppliers nor for the consumers, since it reflects low purchasing power and weak domestic demand and it could even 34 Journal of Economic and Social Studies �The Role of Monetary Policy as the Foundation of Economic Development in Bosnia and Herzegovina lead to the deepening of the recession. Moreover, as previously seen, Bosnia and Herzegovina is having difficulties in achieving even modest growth rate. Although, there is widespread understanding that discretionary monetary policy is not the best sustainable option for countries in transition. Further, CBA mechanism cannot prevent crisis in the banking sector, so consequences of such event can have disastrous effects on a country’s economy. Frederic Mishkin (2007) stated that:”The longer the currency board stays in existence, the greater the likelihood that there will occur a sufficiently large shock that leads to its collapse.” Figure 5: Official and Estimated Core Inflation. Source: BHAS and CBBH Having this in mind, in order for Bosnia and Herzegovina to achieve economic growth, and consequently economic development, it should develop exit strategy from the Currency Board Arrangement. The CBA is considered as a gold-standard in modern monetary system. Furthermore, it served as a stabilization device. However, since it was supposed to remove immediate causes of financial instability, now its abandonment represents the foundation of economic development in B&H. Delphi method, combined with previously used method of analysis, were used to present how changing the current monetary policy regime of B&H could help it achieve better level of economic development. Volume 6 Number 1 Spring 2016 35 �Matej Živković, Lejla Hodžić B&H could theoretically exit from CBA by imposing a central bank regime with autonomous monetary policy and the ability to conduct open market operations or by joining European Monetary Union in order to achieve progress in its economic performance. One has to bear in mind that whatever monetary policy is chosen, in order to provide positive results, appropriate fiscal policy should as well be conducted (Avramov, 2000). Abandoning Currency Board as a monetary policy of B&H could involve two or three stages, as was the case with Lithuania and Argentina and should be done in times when things are going well so that the smooth transition is feasible (Kozarić, 2007). First, it is necessary that the monetary conditions for the monetary reform are created, and that can be done by intervening in the primary market for securities. This means that the possibility of transaction of securities between commercial banks should be introduced, as well as the possibility of issuing notes and Lombard loans which were not in use (Kozarić, 2007). In addition, money market would be transparent and the communication between its operations would be prompt. Improving inter-bank communication, designing money market instruments and infrastructure represent essential precondition for introducing open market operations. Open market operations are significant as they steer interest rates, signal monetary policy viewpoint and manage liquidity. Second, the Central Bank needs to replace Currency Board system and it has to be sufficiently independent so to pursue long-run objectives such as price stability and monetary policy, and instruments other than required reserve have to be introduced. It is important that the Central Bank is independent and isolated from political pressures in order to efficiently achieve its goals and conduct its operations (Mishkin, 2007). This aspect of independency from shortterminism by politicians can be achieved by introducing member in the Board from ECB with veto rights in voting. Operational decision making would be left to domestic actors. Important advantages that B&H could have from independent central bank are the possibility of monetization of deficit and the CBBH having the function of “lender of last resort”. If B&H’s central bank gains the right to print money, then quantitative easing could be chosen. Given the assumption that CBBH could print and create money, it could buy bonds from financial institutions which would reduce the interest rates, further leading people, as well as businesses to borrow more which means they will spend more, create more jobs and thereby boost the economy. 36 Journal of Economic and Social Studies �The Role of Monetary Policy as the Foundation of Economic Development in Bosnia and Herzegovina With the independence of the Central Bank, which already is in force, B&H could choose a somewhat complex way of conducting monetary policy, and that is inflation targeting. In order to adopt inflation targeting, B&H should develop its financial markets and establish a reliable system of measuring inflation. Monetary instruments that would be used in conducting the monetary policy are short-term interest rates and control of the credit. This would further lead to changing fixed exchange rate with floating one, so that CBBH would be able to intervene in the market when it is necessary to ensure stability and avoid inflation (Kozarić, 2007). Floating exchange rate is more efficient than a peg and more important in determining the long-term value of the currency and for creation of the equilibrium in the international market. A gradual move from the almost orthodox CBR to a central banking system would return full monetary sovereignty to CBBH. In addition, great importance in the development of financial markets should be devoted to repurchase agreements. By establishing this money market instrument the way to a broader market development would be alleviated. Monetary instruments available to CBBH must be efficient in controlling overall monetary trends and they must improve, or at least allow, the establishment of market-oriented financial system. These instruments need to be compatible with the financial system within which they will work (Savić & Savić, 2011). For example, CBBH decides to target inflation at a certain low level in order to achieve sustainable economic growth. This could be done by a monetary policy decision which lowers interest rates and therefore also lowers the cost of borrowing. The result of such action would be higher investment activity as well as consumer spending. The expectation arising from lower interest rates that economic activity will strengthen, may cause banks to ease lending policies. Stocks become more attractive for purchase and they raise households’ financial assets. This in turn boosts household and business spending. In addition, with lower interest rates, domestic currency depreciates, imports become more expensive so the domestic demand increases. Combining these factors lead to an increase in output, employment and consumer spending, helping country to achieve higher level of economic development. On the other hand, if the abandonment of CBA is done in order to join the European Monetary Union, benefits are fewer than when imposing a central bank regime, yet still significant. By joining the monetary union, B&H would not have to give up independent monetary policy, since it already has given it up and it imports Volume 6 Number 1 Spring 2016 37 �Matej Živković, Lejla Hodžić one from the European Central Bank. However, there would be no more exchange rates between the members of the Union; therefore competition would be higher, prices would be lower and because of the greater price transparency international trade and investment would increase, causing B&H to move up on the latter of economic development. This would in turn lead to greater global status as well as greater political integration and influence in international affairs (Dolphin, 1995). If Bosnia and Herzegovina abandons Currency Board Arrangement, it could gain control over its monetary policy, and by having all monetary instruments at disposal it could substantially achieve greater level of development. Conclusion There is no universal model of monetary policy that could bring benefits and economic development for all the countries of the world. Monetary policy’s main goal is to achieve price stability, full employment and to balance the BoP. In Bosnia and Herzegovina particularly, the monetary policy under the Currency Board Arrangement has helped the country to achieve price, financial and political stability; however it seems like in the current stable environment it does not help it develop. Therefore, the importance of this research lies in the fact that if the proposals were implemented, B&H could move forward and become more economically stable country. Current situation of the state of monetary policy seems much outdated especially since dominant paradigms across the board have changed targeting economic development. Therefore, the key foundation for B&H’s development might be the abandonment of the CBA and moving toward central bank regime with the authority to conduct open market operations.It is very important for B&H to move away from the currently implemented monetary policy regime, since it only holds the country back from progressing. In that sense, this paper can serve as a useful guideline for policy makers when discussing and forecasting which path and which type of monetary policy to pursue to yield higher economic prospect. The process of transformation towards effective use of open market instruments in policy implementation doesn’t happen overnight and usually involves two or three stages of market development. The transition to indirect instruments of monetary policy causes the operational activities of the central bank and the treasury to become more connected than before. 38 Journal of Economic and Social Studies �The Role of Monetary Policy as the Foundation of Economic Development in Bosnia and Herzegovina Creators of the monetary policy need to closely follow the level of development of the country’s financial system and to, in a timely manner, adjust their monetary activities to those changes. Though it has to be emphasized that transformation of monetary authority into one that has actual instruments at its disposal, should by no means happen at the expense of established independence of monetary pillar of the economy. References Avramov, R. (2000, May). Exit Strategies from Currency Board Arrangements. Tallin, Estonia. Central Bank of Bosnia and Herzegovina. (1997). Monetary Functions and Operations of the Central Bank In Law on the Central Bank of Bosnia and Herzegovina. Sarajevo: Official Gazette of BH, 1/97. Central Bank of Bosnia and Herzegovina. (2002). Article 6. In Law on Amendments and Supplements of the Law on the Central Bank of Bosnia and Herzegovina. Sarajevo: Official Gazette of B&H, 29/02. Central Bank of Bosnia and Herzegovina. (2009). Annual Report for 2009. Retrieved from http://www.cbbh.ba/files/godisnji_izvjestaji/2009/GI_2009_en.pdf Central Bank of Bosnia and Herzegovina. (2011). Annual Report for 2011. Retrieved from http://www.cbbh.ba/files/godisnji_izvjestaji/2011/GI_2011_en.pdf Central Bank of Bosnia and Herzegovina. (2013). Annual Report for 2013. Retrieved from http://www.cbbh.ba/files/godisnji_izvjestaji/2013/GI_2013_en.pdf Centralna Banka Bosne i Hercegovine. (2015). Edukacijski materijal: Devizni kurs. Retrieved from http://www.cbbh.ba/?id=886&lang=bs Dolphin, T. (1995, February 16). European monetary union: the benefits, the problems and the traveller's tale: LETTER. Independent. Retrieved from: http://www.independent.co.uk/life-style/european-monetary-union-the-benefits-theproblems-and-the-travellers-tale--letter-1573305.html Volume 6 Number 1 Spring 2016 39 �Matej Živković, Lejla Hodžić Fabris, N., & Rodić, G. (2013). The Efficiency of the Currency Board Arrangement. Journal of Central Banking Theory and Practice, 1: 157-176. http://www.cbmn.org/eng/index.php?bl=journal Gedeon, S. J. (2009). Money Supply Endogeneity Under a Currency Board Regime: the Case of Bosnia and Herzegovina. Journal of Post Keynesian Economics, 32, 97115. http://econpapers.repec.org/article/mespostke/default2.htm Gedeon, S. J. (2010). The Political Economy of Currency Boards: Case of Bosnia and Herzegovina. South East European Journal of Economics and Business, 5(2), 1932. DOI: 10.2478/v10033-010-0011-6 Gulde, A. M., Julia, K., & Keller, P. (2000). Pros and Cons of Currency Board Arrangements in the Lead-up to EU Accession and Participation in the Eurozone. Brussels: International Monetary Fund. International Monetary Fund. (2014). IMF Country Report No. 14-39. Washington D.C., United States of America. Kovačević, D. (2003). The Currency Board and Monetary Stability in Bosnia and Herzegovina. BIS Papers No 17, 59-61. Kozarić, K. (2007). Modeli monetarne politike sa osvrtom na valutni odbor Bosne i Hercegovine. Retrieved from: http://www.cbbh.ba/files/specijalne_teme_ istrazivanja/STI01_07_I%20tema.pdf Kristić, I. (2007). EPPU Mentored Research Paper:"Sustainability of the Currency Board Arrangement in BiH". Retrieved from: http://www.dep.gov.ba/dep_publikacije/ publikacije/default.aspx?id=256&langTag=bs-BA Mishkin, F. S. (2007). Monetary Policy Strategy. Massachusetts: MIT Press. Office of High Representative (1995). The General Framework Agreement: Annex 4. Retrieved from: http://www.ohr.int/dpa/?content_id=372 Savić, M., & Savić, M. (2011). Mesto i uloga monetarne politike Bosne i Hercegovine prilikom ulaska u Evropsku monetarnu uniju. Singidunum Revija, 8 (2): 19-26. http://www.singipedia.singidunum.ac.rs/content/1-Naslovna 40 Journal of Economic and Social Studies �The Role of Monetary Policy as the Foundation of Economic Development in Bosnia and Herzegovina Wolf, H. C. (2008). Currency Boards in Retrospect and Prospect. Massachusetts : Massachusetts Institue of Technology. Volume 6 Number 1 Spring 2016 41 � 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. 2969 Title A name given to the resource The Role of Monetary Policy as the Foundation of Economic Development in Bosnia and Herzegovina Author Author ŽIVKOVIĆ, Matej HODŽIĆ, Lejla Abstract A summary of the resource. Abstract: Macroeconomic stabilization of every country depends largely upon the conduct of appropriate economic policy, which comprises both fiscal and monetary policy; therefore, it is of great importance to choose the most adequate and productive ones. Many countries across the board have employed monetary policy in their attempt to ease the consequences of economic crises in the aftermath of global financial meltdown, and in the search for sustainable economic development. This paper was confined to the monetary policy in Bosnia and Herzegovina specifically, and its aim was to address the current Currency Board Regime along with the available monetary policy instruments and to determine whether an opportunity for the improvement of economic growth and consequently economic development lies within it. The importance of Central Bank was stressed out, as it represents the anchor of the monetary system. The paper comprises the analysis of the implemented CBR, its brief history, monetary policy instruments available and its consequences on the economy of B&H and based on that, the recommendations for exit-strategy which, ceteris paribus, represent a key to achieving higher levels of development. The economic indicators suggested that macroeconomic performance under CBA is not advantageous for B&H; therefore, it is thought that abandoning the arrangement either by joining the EMU or by making the Central Bank more independent is necessary. Key words: Macroeconomic Stabilization Monetary Policy Instruments;B&H Currency Board Regime; Economic Development; Monetary Easing 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 2016 Keywords Keywords. Article PeerReviewed DOI Digital object identifier doi: http://dx.doi.org/10.14706/JECOSS16615 Identifier An unambiguous reference to the resource within a given context ISSN 1986 – 8502, HB Economic Theory 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. 3513 Title A name given to the resource THE ROLE OF MOTIVATION TO DEVELOP ACOGNITIVE LEARNING STRATEGIE Author Author MULAOSMANOVIĆ, Nejra Abstract A summary of the resource. Cognitive learning styles and learning strategies differ from person to person. Identifying student learning styles helps educators understand how people perceive and process information in different ways. The stable and pervasive characteristics of an individual, expressed through the interaction of one's behavior and personality as one approaches a learning task, is described as a "learning style". Cognitive learning styles and learning strategies affect people differently, depending on whether the person has left hemisphere strengths or right hemisphere strengths. For example, a person who performs best on analytical language might lack understanding and the use of correct syntactical structures, as well as semantically ordered comprehension of words and phonetic articulation. Another person may perform best on tasks calling for intuitive feel for language, which would also include expression, richness of lexical connotation, discourse, rhythm and intonation. Another person may have an affinity for methods that are focused, systematic, sequential and cumulative. Yet another person may have an affinity for methods in which various features are managed simultaneously, realistically and in a significant context.hat same person would be less likely to direct his own learning and may function well in quasi-autonomy (guided discovery), but may well express preference for a formal, teacher-dominated learning arrangement as a compensation for own perceived deficiency in ability to structure. All cognitive strategies differ from one another, just like person differ from one another. We can find many different cognitive or learning strategies, but still it does not mean that everyone would accept and adopt all of them. Someone can performe better with one strategy, but someone else can perform better with another strategy.Learning strategies are “operations employed by the learner to aid the acquisition,storage, retrieval, and use of information...(they are) specific actions taken by thelearner to makeearning easier, faster, more enjoyable, more self-directed, more effective, and moretransferableto new situations” (Oxford, 1990, p. 8).Strategy use varies according to the task, stageof the learner, age of thelearner, the context of learning, individual learning styles, and cultural differences.Currentresearch is now showing that the difference between successful and unsuccessfullearners is morethe quality of strategies used, not quantity. Successful language students do notnecessarily usemore strategies, but instead use different combinations of strategies. Date A point or period of time associated with an event in the lifecycle of the resource 2014 Keywords Keywords. Conference or Workshop Item PeerReviewed PE English https://omeka.ibu.edu.ba/files/original/7376fc04d82c9d988bdd80981021285a.pdf 8749db0a6d643a6aa4fac76ddda611bc 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 IT Senior Design Projects Description An account of the resource The IT Senior Design Projects (SDPs) category showcases innovative and practical final-year capstone projects developed by undergraduate and graduate students in the field of Information Technology. These projects represent the culmination of students' academic and technical expertise, demonstrating their ability to solve real-world problems through software and hardware solutions. 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 THE ROLE OF NLP IN DETECTING HATE SPEECH ON SOCIAL MEDIA Author Author Nora Žehak Abstract A summary of the resource. The accumulation of user-generated content on social media has increased the presence of hate speech and offensive language online, causing serious psychological impact on people. This presents a critical problem for platform moderators and software developers that are trying to create safer online communities. The main purpose of this research is to detect and classify hate speech in social media posts using Natural Language Processing and Machine Learning techniques. By improving the reliability and efficiency of harmful content detection, this research focuses to support efforts in content moderation and reduce the influence of toxic online interactions. The problem was faced using a multi-class classification approach to categorize text into hate speech, offensive language, or neutral speech. To achieve this, a publicly available dataset of labeled tweets was processed through a detailed pipeline involving data cleaning, normalization, and transformation. Text preprocessing steps such as removing URLs, mentions, hashtags, and punctuation, followed by tokenization, stopword removal, and lemmatization, were essential to reduce noise and standardize the input. The cleaned data was then vectorized using Term Frequency-Inverse Document Frequency (TF-IDF) to represent tweets numerically, enabling machine learning algorithms to extract meaningful patterns. The preprocessed dataset was used to create and train a number of classification models, including Logistic Regression, Support Vector Machines, Random Forest, Naive Bayes, and many boosting methods like XGBoost, LightGBM, and CatBoost. The Synthetic Minority Over-sampling Technique (SMOTE) was used during training to address class imbalance and improve the model's detection of minority classes, including hate speech. A broad range of metrics, such as accuracy, precision, recall, F1-score, and confusion matrices, were used to assess performance in order to provide an objective and fair assessment for each class. By demonstrating how NLP and ML techniques may be used to more efficiently detect hate speech, this research supports continuing attempts to automate content moderation. It also lays the foundation for future developments in the discipline by identifying important difficulties in managing complex language and contextual uncertainty. Keywords Keywords. hate speech detection, natural language processing, machine learning, text classification, content moderation, offensive language, TF-IDF, supervised learning, data preprocessing, XGBoost, Random Forest, LightGBM, SVM, Logistic Regression https://omeka.ibu.edu.ba/files/original/03717048f192b504f36d2263fd6255df.pdf 204b62ac992086847daabfc0b68c68d9 PDF Text Text THE ROLE OF PARAPHRASING IN PROMOTING SPEAKING ABILITIES OF TURKISH EFL STUDENTS Gencer ELKILIÇ, Kafkas University,Faculty of Science and Letters, Department of English Language and Literature, Kars, Turkey gencerelkilic1322@gmail.com Turgay HAN , Instructor, Kafkas University,Faculty of Science and Letters, Department of English Language and Literature, Kars, Turkey turgayhan@yahoo.com.tr Doğan SALTAŞ Research Assist. Ardahan University, Faculty of Humanities, Department of English Language and Literature, Ardahan, Turkey sagitdo@hotmail.com Abstract: Promoting speaking skills is one of the most challenging tasks among EFL Turkish students, as it requires not only vocabulary and grammatical knowledge, but also enough amount of cultural information about the target language and correct sound formation. However, especially for the foreign language situation, it isn’t that easy to catch up with enough proficiency in Turkey if the environment isn’t a touristic place. This study, therefore, suggests that speaking skills of EFL learners can be promoted tremendously if the learners are given certain paraphrasing tasks in accordance with their language levels. To this end, 28 intermediate level students (10 males and 18 females) attending regularly to Kafkas University in Kars, Turkey, participated in this study. An oral pretest was given to the participants before starting the study. Throughout the study period the participants were given intermediate level short texts and were wanted to paraphrase them. At the end of the study the participants were given an oral test . According to the result of the study there was a significant difference between pre and posttest.(p=,01.). However, no difference was observed between males and females related to pretest and posttest. Keywords: Promoting Speaking, paraphrasing, Turkish EFL students, Kafkas University. Introduction It is well-known that among the four skills – listening, speaking, reading and writing – seems to be the most important and active..Thus, “for most people, the ability to speak a language is synonymous with knowing that language since speech is the most basic means of communication” (Lazaraton, 2001: 103). Besides its being so important, it is a challenging task for nonnative speakers since the beginning of foreign and second language teaching and learning. The reason why speaking is a challenging task for second language learners as well as for foreign language learners is that learners “must master several difficult microskills , including the pronunciation of unfamiliar phonemes, the correct placement of stress and intonation, and the appropriate use of formal and informal expressions” (Zhang, 2009: 32). In order to promote speaking abilities, numerous studies have been carried out (Hendrickson, 1980; Faerch and Kasper, 1984; Murphy, 1991; Riggenbach, 1999; Harvey and Goudvis, 2000; Lazaraton, 2001; Alptekin, 2002; Rybold, 2006;) , however no perfect method has been found yet. 89 �Background of the Study English language is the most commonly taught foreign language in Turkey, still the intended level is not promosing in both receptive (listening and reading) productive skills (speaking and writing). Because of the University placement tests given by the Higher Educational Council, students planning to attend to the departments of English language and Literature or of ELT and Linguistics, take intensive courses mostly emphasizing test skills rather than speaking or listening. Even while attending to the classes at Universities, in classes that utilize comprehension-based approaches to language teaching, grammar structures and vocabulary acquisition are stressed before speaking, if speaking is stressed at all. Statement of the Problem Despite having enough knowledge on grammatical structure, vocabulary and other aspects of English language, Turkish EFL students studying at Kafkas University, in the Department of English Language and Literature in Turkey, most of the time don’t have the stimana to speak English in and out of classes. Purpose of the study The aim of this study is to search about the effectiveness of paraphrasing technique on promoting fluency in speaking skills. It is thought that paraphrasing can make the learners more active and self confident in using spoken English as well as other skills. Limitation This study is limited only to the fluency of the students pronunciation and intonation haven’t been taken into account. Review of Literature According to Cambridge Learner’s Dictionary paraphrase is “to express something that has been said or written in a different way, usually so that it is clearer”. Oxford Advanced Learner’s Dictionary defines it as “to express what sb has said or written using different words , especially in order to make it easier to understand”. So it is clear from both definitions that paraphrasing is primarily related with speaking skills. On the other hand, paraphrasing has been viewed as a student study skill (Fisk and Hurst 2003:182), however it can be used as a tool promoting speaking skills. According to Fisk and Hurst (2003),” … when students are taught a technique how to paraphrase a text , paraphrasing can strengthen comprehension of both fiction and nonfiction”(p .82). Study of speaking skills has been one of the most favourable subjects of methodology , therefore, “…with the advent of the theory of communicative competence and the practice of communicative language teaching, the teaching of oral communication skills as a contextualized socio-cultural activity has become the focal point in many ESL classrooms” (Lazaraton, 2001: 103). According to Chastain (1988)“…having students talk keeps them involved in the class and gives them the impression that their participation is important” (p.272), in doing so, students can be encouraged to participate in the classroom activities more frequently. Chastain maintains that “although productive practice does not contribute to learning, it does foster retention, which is an important component of learning” (Chastain, 1988:272). Methodology Participants Twenty-eight intermediate-level students (10 males and 18 females) at Kafkas University, in the Department of English Language and Literature served as participants. All participants received a statement of subjects anonymity and confidentiality before participating in the study. Materials Intermediate comprehension passages of Longman Publication written by Byrne( 1987) have been used as paraphrasing text for promoting speaking. Procedure 90 �The study started on 18th September 2008 and ended on 12 nd November. As the study was conducted during the regular class hours (3 hours a week), all the students attending to preparatory class participated in the study. At the beginning of the study, the participants were given an oral pretest in order to determine their levels. At the end of the study a post test was given. And the results have been given in tables in Data Analysis part. Data Analysis As seen in Table 1, 10 (35,7 %) of the participants were males, however, 18 (64%) were females. Table 1. Gender Distributions of the Participants. Frequ ency Percent Female 18 64,3 Male 10 35,7 Total 28 100,0 Table2. Descriptions and Correlations of Pre- and Posttest Scores N Minimum Maximum Pretest Scores 28 25,00 65,00 Posttest Scores 28 65,00 95,00 **. Correlation is significant at the 0.01 level. Mean 44,50 77,71 Std. Deviation 10,25 8,84 Pearson Correlation Sig. .48** ,01 According to Table 2, there is a significant difference between pretest and post-test.(p=,01.) When the means and significance levels are taken into consideration, it is clear that the grades of the participants increased significantly in the post-test. The use of paraphrasing for speaking purposes seems to have worked well. Table 3. The Relationships between Gender and Pre- and Post Test Scores Pretest Scores Posttest Scores Gender N Mean Std. Deviation Female 18 42,00 9,36 Male 10 49,00 10,73 Female 18 78,94 9,12 Male 10 75,50 8,32 F Sig. ,22 ,94 ,05 ,83 However when Table 3, is observed, it can be seen that there is no significant difference between pre-test and post-test related to genders of the participants. So it can be said that using paraphrasing for promoting speaking skills is the same for both males and females. Conclusion Developing speaking skills is one of the most difficult tasks of a foreign language learner, as it requires not only learning the way of the native speakers use a language, but also the structures and vocabulary of that language. In this sense, one basic thing in learning language is to speak it at least fluently as accuracy may follow during the later stages of the teaching-learning process. “… speaking invites feedback, either overt or covert, which is the basis upon which students make adjustments in their learned language system” (Chastain, 1988: 272). Although paraphrasing is mostly used in writing and reading tasks, it can, also, be used for promoting speaking skills. Therefore, as a result of the study it can be concluded that: 1.Praphrasing as a speaking technique should be taught to Turkish EFL students. 91 �2.The students should only concentrate on the fluency, at least for a certain time. 3.When the expected fluency is reached, other aspects of the language such as accuracy of pronunciation, grammar and vocabulary choice as well as intonation should follow. References Alptekin, C.(2002).Towards Intercultural Communicative Competence in ELT.English language Teaching Journal, 56(1): 57-64. Byrne, D.(1987).Intermediate Comprehension Passages with recall exercises and aural comprehension tests. Singapore: Longman. Cambridge Learner’s Dictionary (2001).Cambridge:CUP. Faerch, C.& Kaspar, G.(1984). Two ways of Defining Communication Strategies.Language learning, 34: 45-63. Fisk, C. & Hurst, B. (2003).Parphrasing for Comprehension.The Reading Teacher, 57 (2):182+.Retrieved from www.questia.com on 22.01.1009. Harvey, S. & Goudvis, A.(2000). Strategies that work. Teaching Comprehension to Enhance Understanding. York, ME: Stenhouse. Hendrickson, J.M. (1980). Listening and Speaking Activities for Foreign language Learners. The Canadian Modern Language Review, 36:735-48. Lazaraton, A.(2001). Teaching Oral Skills (pp 103-115)In Marianne Celce –Murcia (ed.), Teaching English as a Second or Foreign Language.USA: Heinle & Heinle. Murphy, J.M. (1991). Oral Communication in TESOL: Integrating speaking, Listening and pronunciation. TESOL Querterly. 25(1):51-75. Oxford Advanced Learner’s Dictionary .(2004). Oxford: Oxford University Press. Riggenbach, H. (1999). Discourse Analysis in the Language Classroom.Volume I.The Spoken Language. Ann Arbor, MI: University of Michigan Press. Rybold, G. (2006). Speaking, Listening and Understanding: Debate for Non-Native English Speakers.NY: International Debate Education Association. Zhang, Y. (2009).Reading to Speak: Integrating Oral Communication Skills.English Teaching Forum, 47(1): 32-34. 92 � 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. 657 Title A name given to the resource THE ROLE OF PARAPHRASING IN PROMOTING SPEAKING ABILITIES OF TURKISH EFL STUDENTS Author Author ELKILIÇ, Gencer HAN, Turgay SALTAŞ, Doğan Abstract A summary of the resource. Promoting speaking skills is one of the most challenging tasks among EFL Turkish students, as it requires not only vocabulary and grammatical knowledge, but also enough amount of cultural information about the target language and correct sound formation. However, especially for the foreign language situation, it isn’t that easy to catch up with enough proficiency in Turkey if the environment isn’t a touristic place. This study, therefore, suggests that speaking skills of EFL learners can be promoted tremendously if the learners are given certain paraphrasing tasks in accordance with their language levels. To this end, 28 intermediate level students (10 males and 18 females) attending regularly to Kafkas University in Kars, Turkey, participated in this study. An oral pretest was given to the participants before starting the study. Throughout the study period the participants were given intermediate level short texts and were wanted to paraphrase them. At the end of the study the participants were given an oral test . According to the result of the study there was a significant difference between pre and posttest.(p=,01.). However, no difference was observed between males and females related to pretest and posttest. 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 L Education (General) https://omeka.ibu.edu.ba/files/original/8fecb2de9e6605befc0acececdae19bc.pdf dc48638442e9b86a867c32bf78e8d2d5 PDF Text Text International Conference on Economic and Social Studies, 10-11 May, 2013, Sarajevo The Role of Person-Job Fit and Organizational Commitment on Emotional Labor: Evidence from Turkey Şenay Yürür Yalova University, Yalova, Turkey senyurur@gmail.com Cengiz Mengenci Yalova University, Yalova, Turkey cengiz.mengenci@yalova.edu.tr Ömür Gündüz Topçu Turkish Airlines Company, İstanbul, Turkey Emotional labor has received considerable attention in recent years. Many jobs in service sector require a significant amount of emotional labor. Emotional labor is defined as “the management of feeling to create a publicly observable facial and bodily display” for a wage (Hochschild, 1983: 7). In the literature, it’s stated that there are two emotional labor strategies: surface and deep acting. Surface acting is expressing organizationally required emotions by hiding real feelings. Deep acting involves changing one’s feelings in order to display organizationally required emotions. Generally research showed that deep acting is more likely to be perceived as sincere as surface acting, so, in terms of service quality and positive customers’ reactions, deep acting is more effective than surface acting. Since deep acting is more effortful than surface acting, we may expect that employees who fit better to their jobs and committed their organizations engage in more deep acting when interacting with their customers. In testing this idea, we predict the following hypothesis: H1: Flight attendants who fit better to their jobs engage in more deep acting than do surface acting. H2: Flight attendants who committed to their organizations engage in more deep acting than do surface acting. In the emotional labor literature, as far as we know there is a dearth of empirical evidence regarding this issue. Therefore, the aim of this study is to analyze the relationship between person-job fit, organizational commitment and emotional labor of flight attendants. Data will be collected from Turkish airlines companies’ flight attendants in Turkey. To analysis the hypothesis, correlation and regression analysis will be used. We used Turkish version (Oz, 2007) of the emotional labor scale developed by Brotheridge and Lee (1998). Organizational commitment was measured using the scale developed by Meyer, Allen and Smith (1993). Person-job fit was measured by Brkich, Jeffs and Carless (2002) scale. Keywords: Person Job Fit, Organizational Commitment, Emotional Labor. 254 � 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. 1669 Title A name given to the resource The Role of Person-Job Fit and Organizational Commitment on Emotional Labor: Evidence from Turkey Author Author YURUR, Senay MENGENECI, Cengiz GUNDUZ TOPCU, Omur Abstract A summary of the resource. Emotional labor has received considerable attention in recent years. Many jobs in service sector require a significant amount of emotional labor. Emotional labor is defined as “the management of feeling to create a publicly observable facial and bodily display” for a wage (Hochschild, 1983: 7). In the literature, it’s stated that there are two emotional labor strategies: surface and deep acting. Surface acting is expressing organizationally required emotions by hiding real feelings. Deep acting involves changing one’s feelings in order to display organizationally required emotions. Generally research showed that deep acting is more likely to be perceived as sincere as surface acting, so, in terms of service quality and positive customers’ reactions, deep acting is more effective than surface acting. Since deep acting is more effortful than surface acting, we may expect that employees who fit better to their jobs and committed their organizations engage in more deep acting when interacting with their customers. In testing this idea, we predict the following hypothesis: H1: Flight attendants who fit better to their jobs engage in more deep acting than do surface acting. H2: Flight attendants who committed to their organizations engage in more deep acting than do surface acting. In the emotional labor literature, as far as we know there is a dearth of empirical evidence regarding this issue. Therefore, the aim of this study is to analyze the relationship between person-job fit, organizational commitment and emotional labor of flight attendants. Data will be collected from Turkish airlines companies’ flight attendants in Turkey. To analysis the hypothesis, correlation and regression analysis will be used. We used Turkish version (Oz, 2007) of the emotional labor scale developed by Brotheridge and Lee (1998). Organizational commitment was measured using the scale developed by Meyer, Allen and Smith (1993). Person-job fit was measured by Brkich, Jeffs and Carless (2002) scale. Keywords: Person Job Fit, Organizational Commitment, Emotional Labor. 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/0f78baa19bf43aa445565e41d1f7a80a.pdf 366c0eee3d0899801678f75a6a9fa6a4 PDF Text Text 2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo The Role of Public and Private Investment to Ensure Sustainable Macroeconomic Stability in Turkey Ömer Faruk ALTUNÇ Mugla University, Department of Economics, Mugla, Turkey ofaltunc@mu.edu.tr Bilge ġENTÜRK Mugla University, Department of Economics, Mugla, Turkey bilge.senturk@hotmail.com Abstract: Private investment plays a vital role to promote sustainable economic growth and to reduce poverty in developing countries. The idea of using private sector investments intensively to boost growth in Turkey has started to emerge after 1980s. Despite a sizeable empirical literature, the impact of public investment in the developing countries gives inconsistent results on whether it complements or crowds out private investment. This paper makes use of Blejer and Khan Model (1984) for Turkey over the 1980-2009 periods estimating the effect of public investment on private sector. We employed time series analysis in this study. Our findings support the hypothesis that GDP growth stimulates private investment while public investment and private investment are complementary. The other finding of the study is that credit constraint is an important determinant of private investments in Turkey. Keywords: Private investment, Blejer and Khan Model, Crowding out/in, ARDL model. Introduction Private investment plays a vital role on the process of growth in developing countries. Even though private investment represents a small component of aggregate demand compared to consumption expenditures, it determines the rate of physical capital accumulation. Therefore private investment is a significant determinant for the expansion of production capacity and long run economic growth (Chibber et al., 1992). Blejer and Khan (1984) emphasize that public investment crowds out private investment because the public sector uses the limited physical or financial resources which are necessary for the production of private sector and it produces good and services which can also be produced by the private sector. Besides, they emphasize that the way of borrowing, taxing and inflation to finance the public investments crowd out private investment. Instead, supplying the infrastructural public investment and public goods can complete the private investments. This kind of public investment can develop the private investment opportunities and increase capital productivity. The investment behaviour is analyzed by using formal models in developed economies such as ‗Accelerator model‘, ‗Tobin‘s q theory of investment‘, ‗Neoclassical flexible accelerator theory‘. Because of the institutional problems and data constraints in Turkey and also in other developing countries, application of these models on these countries is very difficult if not impossible. Sundararajan and Thakur (1980), Wai and Wong (1982) and Blejer and Khan (1984) tried to develop applicable investment models for developing countries. The empirical literature is developed on two approaches which depend on the relationship between private investment and public investment. The first approach is based on the crowding out effect in which public investment expenditure decreases private investment. The second approach is that private investment and public investment are complements (crowding in) rather than rival to each other. Grene and Villanueva (1984) and Seven and Solimano (1991) find out a complementary relationship between public and private investment in developing countries. For African Countries Oshikayo (1994) and for developing countries Blejer and Khan (1984) give empirical evidence for the complementary relationship only between infrastructural public investment and infrastructural private investment. Nazmi and Ramirez (1997) shows that public investment crowds out private investment in Mexico. For the period of 1963-1993, Ghali (1998) finds that public investment has a negative effect on private investment in the short run while it has both negative and positive effect on economic growth and private investment in the long run for the Tunisian economy. The study of Ahmed and Miller (1999) for the OECD countries shows there is a negative relationship between public and private investment however there is a positive relationship between private 111 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo investment and government expenditures on transportation and communication. Ghura and Godwin (2000) shows that public investment crowds in private investment in Sub-Saharan African countries and there is a negative relationship between public and private investment in Asian and Latin American countries. Narayan (2004) tests whether public investment crowds out private investment for Fijian Economy for the period of 1950-2001. He focuses on two different periods as a complementary relation between public and private investment for the period of 1950-1975 and a weak relationship between public and private investment for the period of 1976-2001. The empirical findings show that the results differ across countries. The studies on the same countries have different results. The empirical studies on Turkey have different findings for the crowding in and crowding out hypothesis. Ismihan at al. (2002) emphasize that after the 1970s the relationship between public and private investment has started to show no clear relationship. After 1980s, the crowding in effect of the investments has reversed by the macroeconomic inconsistency and the growth of financial deficit. Taban and Kara (2006) finds out there is not any complementary relationship between public and private investment for the period of 1989:1 and 2004:4. Moreover, they focus on the effect of domestic public borrowing which crowds out private investment. Simsek (2003) studies the effect of different kinds of government expenditure on private investment. His empirical findings for the period of 1970-2001 show that government expenditure has crowding out effect on private expenditure. Bilgili (2003) analyzes the short run and the long run effects of financial policy for the period of 19882003 and he reaches the supporting results for both the crowding in and crowding out hypothesis. Kustepeli (2005) tests both direct and indirect effects of the government expenditures between 1963 and 2000. The results indicate that the real government expenditures crowd in real private investment while the real budget deficit crowds out private investment. Yavuz (2005) found evidence that public investment crowds in private investment for the period of 1980-2003 in Turkey. In this study, based on the Blejer and Khan Model (1984), the effects of the infrastructural and noninfrastructural public investment on private investment for the period of 1980-2009 are investigated by employing the time series techniques. This study will fill an important gap in the literature because there has not been any study that takes into account the effects of the infrastructural and non-infrastructural public investment on private investment. Economic Model Blejer and Khan (1984) investigate the relationship between public and private investment in developing countries and also they focus on the determinants of these investment categories. The model has two important policy variables. The public investment and the banking credits for the private sector are considered in the model which is associated with private investments. The model enables us to see the effects of government expenditure on inflation, rise of wages and crowding out effect. One of the contributions of the model is that it categorizes the public investments by two types as infrastructural and non-infrastructural investments. Moreover, Blejer and Khan (1984) assume the private investment is affected by the public investment categories in different ways. The starting point of Blejer and Khan model for the partial adjustment gross investment model is, (1) PI   ( PI *t  PI t 1 ) or PI t  PI *t  (1   ) PI t 1 (2) PI shows the level of domestic private investment, PI* shows the required level of domestic private investment , t is the time period and β is adjusting coefficient (0    1). The actual capital stock, which affects β, adjusts required level and the actual level in t-1 period. When there is a nonstationary process, the required level of private investment will be, (3) PI *t  1  (1   ) LCS *t CP* represents the required capital stock which is associated with output level in the next periods. (4) CS *t  aYt Combining equations (1) and (4), we get, (5) PI t  a 1  (1   ) LYt  (1   ) PI t 1 For the estimation of such a functional structure, domestic private investment is the only data to be need. Blejer and Khan (1984) denote there are three important factors affecting private investment such as business cycle, the available credits for private sector and the level of public investment. The net effect of public investment on the private investment depends on the size of the crowding out effect and the complementary effect between public and private investment. Crowding out effect is measured by unexpected change in banking credits for the private sector 112 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo (UPC ) which is counted as the difference between the real value and the one-year lagged value of private investments. Adjusting coefficient, β, depends on public investment (GI) and the unexpected change in the banking credits for the private sector: (b UPCt  b2 GI t )   b0  1 ( PI t*  PI t 1 ) (6) Substituting (6) into equation (2) we get: (7) Following PI  b0 ( PI t*  PI t 1 )  b1UPC  b2GI t Blejer and Khan, it can be shown that: PI t  b0 aYt 1  (1   )Yt 2   b1UPC  b2GI t  b3 GI t  (1  b0 ) PI t 1 (8) The effects of public policies on private investment are found by estimating the coefficient of the credit to the private sector (b1) and public investment (b2 ve b3). Blejer and Khan (1984) suggest a method to estimate the component of infrastructural and non infrastructural public investment. Infrastructural investment is assumed as a long-run concept and it becomes a proper representative variable by modelling the expected public investment. (9) GI t  p0  p1GI t 1 Expected values represent the component of infrastructural long run investment and the residual values represent the component of non-infrastructural short run public investment. Therefore the equation is written by, PI t  b0 aYt 1  (1   )Yt 2   b1UPCt  b2 EGI t  b3 UGIt (1  b0 ) PI t 1 (10) Based on the equation 10, the equation 11 is used to estimate the short run and long run coefficients: (11) PI t  b0Yt 1  b1UPCt  b2 EGI t  b3UGI tb4 PI t 1  ut ECI and UGI is the expected and unexpected public investment respectively. The negative sign of b 3 shows the crowding out effect of UGI. This equation is estimated for Turkey using annual data for the period 1980-2009. The infrastructural investment data is gathered from SPO and the others such as GDP, GDP price deflator (1987=100) and the credits to the private sector are gathered from annual statistical reports of TurkStat. Method and Empirical Findings The time series method investigates the non-stationary characteristics of data. It is expected to have a stationary process to have a statistically significant relationship between the variables. If the mean and the variance of the series change in over time, these series are called as non-stationary or unit root series. In order to test the unit root in time series, Augmented Dickey Fuller (ADF) Test is the most common method in literature. The equation which has lagged values in the dependent variable can be formulated with an intercept and time trend as fallows: k yt    t  yt 1    j yt  j   t (12) j 1  is the difference operator, t is the time trend,  is the error term, yt is the series investigated and k is the lag number. ADF assumes that the error term are statistically independently distributed and it has a constant variance. Besides, it is important to select the lag numbers correctly for the power of the test and significance level of the parameters (Said and Dicky, 1984). ADF test depends on the estimation of the parameter  . If  is different from zero and statistically significant, then the hypothesis which shows the series has a non stationary process is rejected. Philips-Perron test (1988) has been developed to control the high frequency correlation and it does not give way to the limitation of the assumptions. Therefore Philips-Perron test (1984) is a complementary unit root test for the ADF test. PP test does not include enough lag values of the dependent variable in the model, so Newey-West estimator is performed to remove the autocorrelation problem in the model. As the absolute value of  in ADF test is greater than the absolute value of Mac-Kinnon critical values, the series has a non-stationary process (Altunc, 2008: 118). Table 1 presents the ADF and PP test results for each series: 113 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo Variables LPRI ADF Test Intercept and Intercept Trend -1.31(0) -1.67(0) Phillips-Perron Test Intercept and Intercept Trend -1.56(3) -1.98(3) LGDP -1.15(0) -3.09(0) -1.17(3) -3.11(1) LPI -2.17(1) -3.05(1) -1.61(5) -1.97(5) UPI -3.34(2)** -3.66(3)** -3.23(5)** -3.68(5)** LPC -2.71(4) -2.48(4) -1.37(4) -1.07(7) DLPRI -5.02(0)* -4.91(0)* -5.02(2)* -4.91(2)* DLGDP -4.66(0)* -4.44(0)* -4.16(4)** -3.87(4)** DLPI -4.05(1)* -3.96(1)* -3.11(13)** -3.66(14)** DLPC -3.73(0)* -3.89(0)* -3.60(27)** -5.11(27)* McKinnon (1996) Critical Values Significant Level Intercept Intercept and Trend 1% -3.68 -4.32 5% -2.97 -3.58 10% -2.62 -3.22 Table 1: Unit Root Test Results L denotes the logarithm of the variables and D shows the first-difference operator. Figures in the parentheses from the ADF test results are the lag values which show there is not an autocorrelation according to SIC. But for the PP test, the numbers in the parenthesis are the optimal Newey-West lag values. ADF test results confirm that all variables excluding UPI are integrated of I(1). The results of ADF and PP test which are related to the noninfrastructural public expenditures (UPI) shows that non-infrastructural public expenditures are stationary and statistically significant in 5% confidence level is I(0). When some of the series are stationary at level and some of them are stationary at first difference level I(1), we can not apply on the traditional cointegration test. This problem can be removed by the autoregressive distributed lag model and the bound test approach which is developed by Paseran, Shin and Smith (2001) to observe the long run relationship between the variables. The cointegration method used here, the Autoregressive Distrubuted Lag (ARDL) method allows testing for a long-run relationship between variables of mixed order of integration (Paseran et al., 2001). There are many advantages of using ARDL model for testing the private investment model on Turkey. The main advantage of this method is that ARDL avoid the pre-testing problems in data. Bound test approach can be applied to studies that have a small size while Engle and Granger (1987) and Johansen (1988, 1995) methods of cointegration are not reliable for small sample sizes. Finally, the ECM, which is derived from ARDL by a linearly simple transformation way, integrates the short run and long run dynamics without losing long run information (Banerjee vd., 1993). As the error correction term in the ARDL model does not have restricted error corrections, the ARDL model is an unrestricted error correction model (UECM). In the UECM, these statistics are used for testing if the lagged values of the variables are statistically significant (Faras and Ghali, 2009; Paseran et al. 2001). The form of the model can be written in our adapted model as: 114 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo m m m m i 1 i 0 i 0 i 0 LPRI   0    1i LPRI t i    2i LGDPt i    3i LPI t i    4i UPI t i m    5i LPC t i   6 LPRI t 1   7 LGDPt 1   8 LPI t 1   9UPI t 1   10 LPC t 1 (12) i 0  ut The cointegration relationship in equation 12 is performed by testing the hypothesis of H 0 :  6   7  8   9  10  0 . The null hypothesis of no cointegration will be rejected if the calculated F-statistic is greater than the upper bound critical value. If the computed F-statistics is less than the lower bound critical value, then we cannot reject the null of cointegration. Finally, the result is inconclusive if the computed F-statistic falls within the lower and upper bound critical values (Gurgur ve Karaca, 2007: 19). In ARDL model, firstly the lag orders of the dependent and independent variables in equation (12) that is represented by ―m‖ must be determined by AIC and SIC criteria. The lag order which gives the smallest critical values is selected as the lag order of the model. If the selected model has autocorrelation, then the second smallest value is selected. If the autocorrelation problem still exists, the same process is applied until autocorrelation is removed (Karagol at al., 2007: 76). In this study, the maximum lag length of two is chosen in ARDL model because of the annual data and limited observations. m AIC SBC 2  BG 1 2 3 -7.503501 -8.407829 -9.937074* -5.809910 -5.504529 -5.824066* 5.877** 4.518*** 1.120 Table 2: Determining the Lag Order for ARDL Notes: m denotes the lag order.  BG is Breusch-Godfrey autocorrelation test statistic. The superscript **,*** indicate that there is an autocorrelation among residuals at the 5% ve 10% levels, respectively. 2 Table 2 shows that the smallest value is obtained when the lag order of 3 by considering both AIC and SBC. The problem of autocorrelation has been also removed in the same lag order. Therefore the private investment model is estimated at lag 3. The ARDL approach is applied to test whether there is a long run relationship between private investment and other variables which affects private investment. The F statistics which is counted for testing the fundamental hypothesis of the long run relationship between variables in the model has higher values than Paseran et al (2001) critical values. According to Narayan (2005), the existing critical values reported in Pesaran et al. (2001) cannot be used for small sample sizes because they are based on large sample sizes. Narayan (2005) provides a set of critical values for sample sizes ranging from 30 to 80 observations. Given the relatively small sample size in this study, we also compare the calculated F-statistics with the critical values from Narayan (2005). Both of them give the same result. k 3 F-statistic 6.45 Critical Bound‘s Value (%1) Lower Upper I(0) I(1) 4.29 5.61 Critical Bound‘s Value (%5) Lower Upper I(0) I(1) 3.23 4.35 Table 3: ARDL Bound Testing for Cointegration Analysis Note: k indicate the number of regressors in the model. The appropriate lag lengths are selected by SBC. Breusch-Godfrey autocorrelation test statistic (  BG ) is 2.327(0.17) when the lag order of three (m=3). So we cannot reject the null hypothesis and conclude that there is not autocorrelation in the model. Source of critical values: Paseran at al., 2001 and Narayan, 2005. 2 By using the SBC criteria, the optimal lag length is selected to estimate the long run parameters of the relationship between private investment, GDP, total infrastructural public investment and credit to private investment. We select 2 lags for the private investment (PRI), 3 lags for the credit to private investment (PC), 0 lag for the public investment, 2 lags for the GDP and unexpected public investment (UPI). The estimation results of ARDL model (2, 3, 0, 2, 2) and the results of the descriptive tests are given in Table 4: 115 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo Regressor Coefficients Stand. Eror LPRI(-1) 1.586 0.240 LPRI(-2) 0.902 0.283 LPC 0.487 0.135 LPC(-1) 0.387 0.181 LPC(-2) -0.034 0.182 LPC(-3) -0.588 0.176 LPI 1.031 0.523 LGDP 6.120 1.958 LGDP(-1) 13.578 3.938 LGDP(-2) 13.163 4.091 UPI 0.146 0.138 UPI(-1) -0.117 0.109 UPI(-2) 0.194 0.061 C 12.832 3.124 R2=0.887 Rd2=0.764 F-stat=7.220(0.001) Breusch Godfrey LM Test (1)= 0.935(0.333) Ramsey Reset Test(1)=1.013(0.314) Jarque Bera Test(2)=1.473(0.479) White Test(1)=1.158(0.362) t-Stat 6.611 3.181 3.609 2.136 -0.187 -3.338 1.972 3.126 3.445 3.218 1.055 -1.064 3.208 4.108 Prob. 0.000 0.008 0.004 0.054 0.855 0.006 0.072 0.009 0.005 0.007 0.312 0.308 0.008 0.001 Table 4: Estimation Results of ARDL (2,3,0,2,2) Model The test statistics indicate that there is not any problem in the ARDL model. To complement this study it is important to investigate whether the long run relationship among variables are stable for the entire period of study. In other words, we have to test for parameter stability. The test results of CUSUM and CUSUMQ in which the stability of the parameters is observed indicate that the residuals are stays within the 5 percent critical bound and there is not a structural change in the model (Figure 1). Plot of Cumulative Sum of Recursive Residuals (CUSUM Test, 5% significance) Plot of Cumulative Sum of Squares of Recursive Residuals (CUSUMSQ) 1.5 15 10 1.0 5 0.5 0 -5 0.0 -10 -15 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 -0.5 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Figure 1: Plot of Cumulative Sum of Squares of Recursive Residuals (CUSUM, CUSUMSQ) The long run coefficients in ARDL model (2, 3, 0, 2, 2) and diagnostic tests are given in Table 5. Due to some of the variables in the model are non-stationary, the assumption of normal distribution is invalidated or we can not attain normal distributed standard errors. The inference based on t statistics, therefore, will not be valid anymore. This problem can be removed by calculating the asymptotic standard errors of the long run coefficients by delta method (Paseran and Paseran, 1997; Caglayan, 2006; Erden and Saglam, 2009). 116 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo Regressor LPI LPC LGDP UPI C Long Run Coefficient 0.295 0.072 9.420 0.064 2.789 Standard Error 0.143 0.032 1.852 0.021 0.336 t-Stat 2.056*** 2.238** 5.085* 3.054* 8.301* Table 5: Estimated Long Run Coefficients using the ARDL (2,3,0,2,2) Note: *, **, and *** denote significant at 1, 5, and 10% levels, respectively. Table 5 shows that all variables are statistically significant and their long run coefficients are positive. The long run results show that GDP growth has a strong and statistically significant positive effect on private investment. Also there is a complementary relationship between private investment and both total infrastructural and noninfrastructural investment. Likewise there is a positive and significant relationship between bank credit to private sector and private investment. The short run relationship between variables is analyzed by error correction model based on ARDL. The model, m m m m i 1 i 0 i 0 i 0 LPRI t   0    1i LPRI t 1    2i LGDPt 1   LPI t 1   UPI t 1 m   LPC t 1  ECTt 1  u t i 0 (13) ECT represents the error-correction term. The coefficient of ECT, (λ), shows that the disequilibrium is corrected in the current year. The functionality of the error correction model depends on its negative and significant coefficient. The short run relationship based on Model (13) is shown in Table 6. Regressor ∆LPRIt-1 ∆LPC ∆LPCt-1 ∆LPCt-2 ∆LPI ∆LGDP ∆LGDPt-1 ∆UPI ∆UPIt-1 ECMt-1 ∆C R2=0.939 Coefficient 0.902 0.486 0.622 0.588 1.031 6.119 -13.163 0.146 -0.194 -1.488 12.832 Rd2=0.873 Standard Error t-Stat 0.283 3.181* 0.135 3.609* 0.121 5.140* 0.176 3.338* 0.523 1.972** 1.958 3.126* 4.090 -3.218* 0.138 1.055 0.061 -3.207* 0.471 -3.157* 3.024 4.243* F-stat(10,15)=18.438(0.000) Prob. 0.006 0.003 0.000 0.004 0.067 0.007 0.006 0.308 0.006 0.006 0.001 Table 6: ARDL (2,3,0,2,2) Error Correction Model Presentation The coefficient of error correction term (ECT t-1) is determined as -1,488. The sign of the error correction term is negative and statistically significant as expected. The coefficient of the error correction variable is greater than 1 and this shows the system tends to equilibrium path by diminishing and fluctuating at every turn (Erden ve Saglam, 2009: 29; Karagol vd., 2007: 78; Paseran ve Paseran, 1997: 404). When the short run coefficients are analyzed, we see that all variables are statistically significant excluding non-infrastructural public investment (∆UPI). Short run estimating results indicate that there is a complementary relationship between private investment and infrastructural public investment. 117 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo Conclusions In this study, total private investment, total infrastructural and non-infrastructural public investment, real GDP growth and the relationship among all these variables are estimated for the short and the long run, based on the Blejer and Khan Model (1984). The long run coefficients of all variables are positive in the ARDL model. The long run results show that the private investment is stimulated by the total infrastructural and non-infrastructural public investment. The empirical findings support that both of two descriptions of investment do not crowd out private investment, on the contrary they both crowd in (complement) private investment. Besides, we reach that the growth in private sector credits and the growth in GDP affect the private investment positively in the long run. These empirical findings are contrary to the studies for Turkey (Taban ve Kara, 2001; Yavuz, 2001; Ismihan vd., 2002; Simsek, 2003; Bilgili, 2003) but support the results of the studies of Yavuz (2005) and Kustepeli (2005) on the relationship between public and private investment. Many of the variables excluding total non-infrastructural public investment in the short run ARDL model are statistically significant. The error correction term is negative and statistically significant and it shows there is an error correction mechanism. The lagged values of the private investment are positive and statistically significant and this finding supports the estimation results of Blejer and Khan Model (1984). The capital stock adjustment model implies that private investment adjusts the actual level of the capital investments to the optimal level. The other finding shows that in the short run there is a complementary relationship between private investment and current value of the total non-infrastructural public investment. The short run coefficient of total non-infrastructural public investment has a negative sign that means the non-infrastructural public investments crowd out the private investments in the short run. The sustainability of the private sector investment and contributions of the private sector investment on GDP are possible with selective government policies. Creating a suitable investment environment, increasing the availability of credits and giving priority to the productive investments depend significantly on the coordination between private sector investments and government policies. References Ahmed H. and Miller S. (1999), ―Crowding Out and Crowding-In Effects of the Components of Government Expenditure‖, Working Papers 1999-02, University of Connecticut, Department of Economics. Altunc, Ö.F., (2008), ―Türkiye‘de Finansal GeliĢme ve Ġktisadi Büyüme Arasındaki Nedenselliğin Ampirik Bir Analizi‖, EskiĢehir Osmangazi Üniversitesi Ġ.Ġ.B.F. Dergisi, 3(2), 113-127. Banerjee, A., Galbraith J. and Hendry D. (1993), Cointegration, Error Correction and Econometric Analysis of Non-stationary Data. Oxford Univ. Press, Oxford. Bilgili, F. 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(2002), ―Macroeconomic Instability, Capital Accumulation and Growth: The case of Turkey 1963-1999‖, Middle East Technical University- ERC, International Conference in Economics VII , Working Papers in Economics 02/04. Karagöl, E., Erbaykal E. ve Ertuğrul H.M. (2007), ―Türkiye‘de Ekonomik Büyüme ile Elektrik Tüketimi ĠliĢkisi: Sınır Testi YaklaĢımı‖, DoğuĢ Üniversitesi Dergisi, 8(1), 72-80. Karluk, R. (2001), Türkiye‘de Yabancı Sermaye Yatırımlarının Ekonomik Büyümeye Katkısı (2001), Ekonomik Ġstikrar, Büyüme ve Yabancı Sermaye, TCMB Ġnsan Kaynakları Genel Müdürlüğü, Eğitim Müdürlüğü, 97-115. Kılıçbay, A. (1991), Türk Ekonomisinin Son 10 Yılı, Milliyet Yayınları, Ġstanbul. KuĢtepeli, Y. (2005), ―Effectiveness of Fiscal Spending: Crowding out and/or crowding in?‖, Celal Bayar University, Yönetim ve Ekonomi Dergisi, 12(1), 182-192. Narayan, P.K. and Smyth R. (2006), ―What Determines Migration Flows from Low-income to High-income Countries? An Empirical Investigation of Fiji-US Migration 1972-2001‖, Contemporary Economic Policy, 24(2), 332-342. Narayan, P.K. (2004), ―Do Public Investment Crowd Out Private Investments? Fresh Evidence from Fiji‖, International Economic Journal, 12, 93-104. Narayan, P.K. (2005), ―The Saving and Investment nexus for China: Evidence from Cointegration Tests‖, Applied Economics, 37, 1979–1990. Nazmi, N. and Ramirez M. (1997), ―Public and Private Investment and Economic Growth in Mexico‖, Contemporary Economic Policy, 15, 65-75. Oshikoya, T.W. (1994), ―Macroeconomic Determinants of Domestic Private Investment in Africa: An Emperical Analysis‖, Economic Development and Cultural Change, 42(3), 327-596. Pesaran, M.H., Shin, Y. and Smith R. J. (2001), ―Bound Testing Approaches to the Analysis of Long Run Relationships‖, Journal of Applied Econometrics, Special Issue, Vol.16, 289-326. Pesaran, M.H. and Pesaran, B. (1997), Working with Microfit 4.0, Interactive Econometric Analysis, Oxford University Press, Oxford. Said, E.S. and Dickey D.A. (1989), ―Testing for Unit Roots in ARMA(p,q) Models with Unknown p and q‖, Biometrika, No.71, 599-607. Serven L. and Solimano A. (1991), ―Adjustment Policies and Investments Performance in Developing Countries; Theory, Country Experiences, and Policy Implications‖, Paper 606, World Bank Country Economics Department. ġimĢek, M. (2003), ―Kamu Harcamalarının Özel Yatırımlara Etkileri, 1970-2001‖, C.Ü. Ġ.Ġ.B.F. Dergisi, 4(2). Taban, S. ve Kara A. (2006), ―Türkiye‘de Kamu Kesimi Ġç Borçlanmasının Özel Yatırım Harcamaları Üzerindeki Etkisi‖, EskiĢehir Osmangazi Üniversitesi Ġ.Ġ.B.F. Dergisi, 1(2), 11-26. Yavuz, N.Ç. (2005), ―Türkiye‘de Kamu Harcamalarının Özel Sektör Yatırım Harcamalarını DıĢlama Etkisinin Testi (19802003)‖, Marmara Üniversitesi Ġ.Ġ.B.F. Dergisi, 20(1), 269-284. . 119 � 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. 195 Title A name given to the resource The Role of Public and Private Investment to Ensure Sustainable Macroeconomic Stability in Turkey Author Author ALTUNÇ, Ömer Faruk ŞENTÜRK, Bilge Abstract A summary of the resource. Private investment plays a vital role to promote sustainable economic growth and to reduce poverty in developing countries. The idea of using private sector investments intensively to boost growth in Turkey has started to emerge after 1980s. Despite a sizeable empirical literature, the impact of public investment in the developing countries gives inconsistent results on whether it complements or crowds out private investment. This paper makes use of Blejer and Khan Model (1984) for Turkey over the 1980-2009 periods estimating the effect of public investment on private sector. We employed time series analysis in this study. Our findings support the hypothesis that GDP growth stimulates private investment while public investment and private investment are complementary. The other finding of the study is that credit constraint is an important determinant of private investments in Turkey. 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/8e2f72cd0990323e7a599543634c61ae.docx d1c2a4d515182d0e3149996f9c404180 https://omeka.ibu.edu.ba/files/original/7e949824e84d736b99e1973ee7416222.pdf 1bc9bb30d33e8070d2cd1eae2c5078ee PDF Text Text The Role of Qualifications of Accounting Profession in the Prevention and Detection of Accounting Frauds in Companies in Bosnia And Herzegovina Ševala Isaković-Kaplan University of Sarajevo Bosnia and Herzegovina sevala.isakovic-kaplan@efsa.unsa.ba Abstract: The meaning and purpose of preparing and presenting financial statements of legal entities is collecting true and fair information from different users of financial statements who are on financial positions, which results in cash flows of the legal entity during a determined period. Unfortunately, the practice of financial reporting in the world, and here, largely weighed down by using illegal accounting techniques aimed showing financial position and success in accordance with the interests of the accountant / manager / owner of the company. The public expects auditors to detect all frauds in an entity committed by employees and managers. Unfortunately, the expectation that the auditor detects all accounting fraud committed in an entity is only a utopia for those who do not know the role and task of the audit. Hope for more efficient detection of accounting fraud today is a new discipline of accounting - forensic accounting and a new accounting professional title - forensic accountant. Unfortunately, in Bosnia and Herzegovina’s higher education institutions there is no systematic and scientific study of the discipline of forensic accounting, or an aim to implement the training and certification program for forensic accountant. The consequences of this situation are extremely negative for the whole economy, whereas business scams in the financial statements are followed, detected and prevented by the supervisory authorities and external auditors in accordance with their domain of activity, but research and practice around the world has shown that this is still an insufficient type of prevention. The purpose of this paper is to provide a comparative overview of the roles of various qualifications of accounting profession in the active prevention and detection of accounting frauds in the companies, while the final aim of this paper is the presentation of relevant characteristics of forensic accounting as a relatively young scientific discipline, as well as highlighting the role of forensic accountant as a new accounting professional qualification in the fight against accounting frauds. Keywords: accounting fraud, certified accounting technician, certified accountant, external auditor, forensic accountant. 129 �129 � 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. 2592 Title A name given to the resource The Role of Qualifications of Accounting Profession in the Prevention and Detection of Accounting Frauds in Companies in Bosnia And Herzegovina Author Author ISAKOVIĆ-KAPLAN, Ševala Abstract A summary of the resource. The meaning and purpose of preparing and presenting financial statements of legal entities is collecting true and fair information from different users of financial statements who are on financial positions, which results in cash flows of the legal entity during a determined period. Unfortunately, the practice of financial reporting in the world, and here, largely weighed down by using illegal accounting techniques aimed showing financial position and success in accordance with the interests of the accountant / manager / owner of the company. The public expects auditors to detect all frauds in an entity committed by employees and managers. Unfortunately, the expectation that the auditor detects all accounting fraud committed in an entity is only a utopia for those who do not know the role and task of the audit. Hope for more efficient detection of accounting fraud today is a new discipline of accounting - forensic accounting and a new accounting professional title - forensic accountant. Unfortunately, in Bosnia and Herzegovina’s higher education institutions there is no systematic and scientific study of the discipline of forensic accounting, or an aim to implement the training and certification program for forensic accountant. The consequences of this situation are extremely negative for the whole economy, whereas business scams in the financial statements are followed, detected and prevented by the supervisory authorities and external auditors in accordance with their domain of activity, but research and practice around the world has shown that this is still an insufficient type of prevention. The purpose of this paper is to provide a comparative overview of the roles of various qualifications of accounting profession in the active prevention and detection of accounting frauds in the companies, while the final aim of this paper is the presentation of relevant characteristics of forensic accounting as a relatively young scientific discipline, as well as highlighting the role of forensic accountant as a new accounting professional qualification in the fight against accounting frauds. Keywords: accounting fraud, certified accounting technician, certified accountant, external auditor, forensic accountant.   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 2014-04 Keywords Keywords. Article PeerReviewed Identifier An unambiguous reference to the resource within a given context ISSN 2303-4564 H Social Sciences (General) https://omeka.ibu.edu.ba/files/original/718e1f93fbc236a90fc0b987b10b2e2a.pdf be94b4b4288250352e5d86363ce3ab3a PDF Text Text International Conference on Economic and Social Studies, 10-11 May, 2013, Sarajevo The Role of Religion on Turkey’s International Trade Halil Uçal Adnan Menderes University, Aydın, Turkey hucal@adu.edu.tr In the last decade, with the help of political stability, Turkish economy has grown rapidly. After the financial crisis in 2001 not only economy but also international trade volume has started to improve. The trade policy which had focused on Customs Union with European Community changed and resulted to expansion to other regions. Especially Middle East and Asian countries’ share increased in Turkey’s total trade. As it is known, there has been a debate about Turkey's shift of axis on foreign policies and on international trade. In recent years Turkey carries out more active policies in Middle East region. According to some views, a conservative and religiously oriented government is the cause of the changes in policies. The aim of this paper is to find the role of the religious affinity on Turkey's international trade. Turkey's foreign trade will be analyzed by using Gravity Theory Method. Panel regression method will be used for econometric modeling. The variables used in the model covers 2002-20011 yearly data of Turkey's bilateral trade volumes with main trade partners. In the first section, a comparative analysis of Turkish foreign trade will be made between the last decades and before. In the second section, the new aspects on foreign policies and the effects on foreign trade will be discussed. In the third section, the econometric analysis will be presented. Finally, the empirical results will be discussed. It is expected that the religious similarity plays a positive role in enhancing foreign trade. Keywords: Gravity Theory, Trade, Religion, Turkey. 142 � 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. 1572 Title A name given to the resource The Role of Religion on Turkey’s International Trade Author Author UCAL, Halil Abstract A summary of the resource. In the last decade, with the help of political stability, Turkish economy has grown rapidly. After the financial crisis in 2001 not only economy but also international trade volume has started to improve. The trade policy which had focused on Customs Union with European Community changed and resulted to expansion to other regions. Especially Middle East and Asian countries’ share increased in Turkey’s total trade. As it is known, there has been a debate about Turkey's shift of axis on foreign policies and on international trade. In recent years Turkey carries out more active policies in Middle East region. According to some views, a conservative and religiously oriented government is the cause of the changes in policies. The aim of this paper is to find the role of the religious affinity on Turkey's international trade. Turkey's foreign trade will be analyzed by using Gravity Theory Method. Panel regression method will be used for econometric modeling. The variables used in the model covers 2002-20011 yearly data of Turkey's bilateral trade volumes with main trade partners. In the first section, a comparative analysis of Turkish foreign trade will be made between the last decades and before. In the second section, the new aspects on foreign policies and the effects on foreign trade will be discussed. In the third section, the econometric analysis will be presented. Finally, the empirical results will be discussed. It is expected that the religious similarity plays a positive role in enhancing foreign trade. Keywords: Gravity Theory, Trade, Religion, Turkey. 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