A study on the effect of imported wheat prices on Türkiye's pasta exports: ARDL approach

Sarihan, Ahmed Yusuf Article A study on the effect of imported wheat prices on Türkiye's pasta exports: ARDL approach Ekonomika Provided in Cooperation with: Vilnius University Press Suggested Citation: Sarihan, Ahmed Yusuf (2024) : A study on the effect of imported wheat prices on Türkiye's pasta exports: ARDL approach, Ekonomika, ISSN 2424-6166, Vilnius University Press, Vilnius, Vol. 103, Iss. 2, pp. 45-65, https://doi.org/10.15388/Ekon.2024.104.2.3 This Version is available at: https://hdl.handle.net/10419/323147 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ 45 Ekonomika ISSN 1392-1258 eISSN 2424-6166 2024, vol. 103(2), pp. 45–65 DOI: https://doi.org/10.15388/Ekon.2024.104.2.3 A Study on the Effect of Imported Wheat Prices on Türkiye’s Pasta Exports: ARDL Approach Ahmed Yusuf Sarihan Bandırma Onyedi Eylül University, Turkey Email: [email protected] ORCID: https://orcid.org/0000-0001-7119-9852 Abstract. Türkiye has possessed significant agricultural opportunities throughout its history. Although the effective utilization of these opportunities is a subject of debate today, the country still plays a significant role in the global trade of some agricultural products. When discussions about Türkiye’s exports are examined, a common complaint is the external dependency of the export industry. However, there are also debates about the diminishing agricultural advantages that have been present since the past. When these discussions are brought together, the trade of certain processed agricultural products, whose raw materials are agricultural products, also becomes a noteworthy research topic due to a similar import dependency. In this study, an analysis was conducted using time series and the ARDL model to investigate whether there is a relationship between Türkiye’s pasta export quantity, as one of the leading pasta exporter’s globally, and the prices of wheat imports from Ukraine, Russia, and Bulgaria. Also robustness checks enhanced the analyzes by employing FMOLS and DOLS methods. The research findings indicate variations in the impact of wheat prices from country to country on the quantity of pasta exported by Türkiye. Recommendations regarding the importance of wheat production in Türkiye are also provided as a result of the research. Keywords: Export-Import Analyzes, ARDL, FMOLS, DOLS Introduction The climate crisis and the sustainability agenda have led to increased discussions on agricultural production and consumption. While high-tech products dominate the lion’s share of trade in the current global economic system, the inherent necessity of food in human life is making the importance of food more pronounced with each passing day during global crises. Events such as the COVID-19 pandemic (Hatipoğlu, 2021), the Russia-Ukraine war (Yenginar, 2022), and the ongoing Israel-Palestine conflict underscore the significance of food supply. Particularly in Türkiye, the sunflower oil crisis and food price inflation during the pandemic highlight some agricultural issues that the country needs to carefully address (Gündüz, 2021). From the past to the present, Türkiye has faced challenges in maintaining its title as an agricultural paradise (Aksoylu & Karaalp-Orhan, 2022). Factors such as Received: 22/03/2024. Revised: 13/04/2024. Accepted: 29/04/2024 Copyright © 2024 Ahmed Yusuf Sarihan Published by Vilnius University Press This is an Open Access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited. Contents lists available at Vilnius University Press ISSN 1392-1258 eISSN 2424-6166 Ekonomika. 2024, vol. 103(2) 46 rapidly increasing population, global migrations, inefficient use of agricultural land, and a decrease in irrigation areas for various reasons undermine Türkiye’s claim of self-sufficiency in agriculture. In addition to these, more of the factors can be seen such as agricultural subsidies and rural-urban migration (Sugozu et al., 2017; Tasci et al., 2023). With these issues unfortunately claiming to be an agricultural heaven is losing its validity in today’s context. The presence of products like chickpeas, beans, and lentils originating from the Americas, such as Mexico and Canada, on the shelves of markets indicates that Turkish cities, which were once associated with the production of these products, are now falling short in terms of production (TMO, 2021). Especially lentil import is kind of new for Türkiye (Gulumser, 2016). Apart from these examples, Türkiye occupies a distinctive position in terms of bread consumption compared to other countries around the world (Dolekoglu et. al., 2014). Bread and various dough products hold a significant place within the basic dietary habits of the Turkish population (Koca and Yazici, 2014). In fact, bread is considered a sacred blessing in Türkiye. Turkish women, even without the necessity of local bakeries or industrial bread production facilities, create different types of bread when they have access to flour. The majority of the Turkish population consumes bread or dough products in every meal of the day. This situation also highlights the demand for the fundamental raw material, wheat. The source of wheat is of great importance for Türkiye at this point. The table below shows the countries from which Türkiye imported the most wheat in 2022 (ITC, 2024a). Table 1. Wheat Exporters for Türkiye (2022) Exporter Country Value Imported (USD Thousand) Share of Türkiye’s Imports % Russia 2,395,449 71,4 Ukraine 719,333 21,4 Brazil 52,825 1,6 Mexico 34,957 1 Bulgaria 32,794 1 Kazakhstan 26,987 0,8 Moldova 23,780 0,7 Argentina 22,520 0,7 Syria 15,009 0,4 Latvia 14,982 0,4 These countries account for more than 99% of Türkiye’s wheat imports. Additionally sectors in Türkiye that relies on wheat for sustenance is not limited to bread or pastry alone. Türkiye is one of the leading exporters of pasta worldwide. The ease with which pasta can be prepared for consumption has made it a universally beloved food, elevating it to the status of a significant product globally. It is worth emphasizing that, in terms of potential markets, this important product knows no bounds. The table below shows the countries that exported the most pasta in 2022 (ITC, 2024b). Ahmed Yusuf Sarihan. A Study on the Effect of Imported Wheat Prices on Türkiye’s Pasta Exports: ARDL Approach 47 Table 2. Leader Pasta Exporters of World (2022) Exporter Country Value Exported (USD Thousand) Share of World’s Imports % Italy 4,169,527 28,7 China 1,195,235 8,2 South Korea 978,361 6,7 Türkiye 964,539 6,6 Thailand 663,258 4,6 Viet Nam 464,706 3,2 USA 438,995 3 Belgium 412,920 2,8 Germany 401,256 2,8 Netherlands 363,691 2,5 Table 2 shows that Türkiye ranks fourth among the world’s top pasta exporting countries. However, viewing the pasta trade as a completely profitable and effortless venture would be an erroneous approach. This is because pasta, being a low-value-added product, can be produced and exported by many countries as can be seen from the Table 2 above. Though finding new export markets for many products may be challenging, products like pasta can easily enter any market based on customer preferences. 1. Theoretical Framework The crucial issue here is whether one country possesses the factors to produce pasta efficiently. Heckscher (1919) and Ohlin’s (1933) Factor Endowment Theory suggest that a country has a comparative advantage in exports based on its superiority in the production factors it possesses. When we look at the example of Türkiye, which has been considered throughout this study, it is expected that Türkiye indeed has a historical advantage in agricultural products. Türkiye, with its productive plains, is known as an important center for wheat. However, in contemporary times, Türkiye, despite its historical advantage in wheat production, is not self-sufficient and resorts to importing wheat from abroad. In other words, Türkiye purchases production factors, such as wheat, from other countries to use them in different stages of the production process. Examining Türkiye’s imports, it can be observed that the majority of wheat is purchased from Ukraine, Russia, and Bulgaria (see Table 1). This deviation from self-sufficiency in wheat production aligns with the central premise of the Factor Endowment Theory, indicating that countries may engage in international trade to acquire the necessary production factors they lack domestically. In this study, as the variables expected to influence Türkiye’s pasta exports are not limited to imported raw material prices alone, there is a need for a theory to explain the relationship between exchange rates and exports. The Marshall-Lerner Condition, which suggests that increases in exchange rates will boost countries’ exports (Bahmani et al., 2013), offers a second theoretical foundation for this study. In fact, the origin of this theory is based on Robinson’s (1937) work, and it has been strengthened by criticism from Hirschman (1949), ISSN 1392-1258 eISSN 2424-6166 Ekonomika. 2024, vol. 103(2) 48 drawing attention to issues such as price elasticity. However, fundamentally, as mentioned above, it is possible to conclude that increases in exchange rates will lead to higher exports. Additionally, according to the price effect approach, it can be argued that increases in exchange rates will encourage exporters to increase sales to earn more income, thus achieving an increase in the country’s exports at the macro level (Zamani et al., 2013). As seen in this study, the Factor Endowment Theory, an important international trade theory and Marshall-Lerner Condition will form the foundation of the research. Before delving into the methodology section, similar studies conducted globally will also be addressed. 2. Literature Review Firstly, it is important to note that any product traded in the world is referred to as a commodity. In this context, studies related to factors influencing commodity exports will be examined. Through these studies, variables affecting the export quantity of a commodity will be revealed. Subsequently, research on pasta trade worldwide, especially in countries like Italy, and factors influencing pasta trade will be discussed. In the next stage, studies on the relationship between pasta and wheat in Türkiye will be examined. Last stage of literature review will host the studies about exchange rate and export relationship. This approach aims to provide a better understanding of why such a study is needed before moving on to the methodology section. Nikonenko et al. (2020) state that the volatility in raw material prices affects the exports of commodity-exporting countries in world trade. Similarly, there are empirical studies that examine different countries for different commodities (McGregor, 2017; Jawaid and Waheed, 2011; Schmitt-Grohe and Uribe, 2018). In these studies, relationships between increases in commodity prices and the variability of global markets and economic growth are observed. In his research emphasizing the importance of commodity supply for different commodities, Tiess (2010) has stated that price increases can affect competition in various ways. In another study, Wlodarczyk (2018) has expressed that price volatility in commodity markets significantly affects the real economy. Niemi (2018) has stated that exports may vary depending on the price. Also, Khalifa (2016) has revealed that raw material prices are determinant for exports. The assumption that this highly probable change could be reflected in Türkiye’s pasta exports through the change in raw material, namely wheat prices, is crucial for this study. Golikova et. al., (2020) have conducted research at a crucial point that will contribute significantly to this study. According to their study, price fluctuations in agricultural raw materials affect the planning of agricultural production. The existing research in the literature that examines the relationship between raw material prices and commodity exports strengthens the starting point and theoretical foundation of the study. Subsequent studies, however, focus specifically on pasta, which is the central focal point of this research. Turning into international studies on the commercial structure of pasta, it is possible to encounter examinations from different perspectives. In their research highlighting modern pasta production in the context of sustainability, Recchia et al. (2019) emphasized Ahmed Yusuf Sarihan. A Study on the Effect of Imported Wheat Prices on Türkiye’s Pasta Exports: ARDL Approach 49 that companies engaged in global pasta exports using imported wheat are strong in this sector. It has been particularly noted that Mexico and Canada hold significant positions in wheat exports. In Italy, on the other hand, wheat is mainly supplied by local wheat suppliers, and wheat from France, the United States, and Australia are integrated into pasta production (Andrade-Sanchez, 2014; Samson et al., 2016). Mukhametzyanov et al. (2021), in their study on the production and export potential of grains and their subgroups, including wheat and other agricultural products that serve as raw materials for many products, including pasta, have indicated that these play a significant economic role. Therefore, the export of these products is also emphasized to have strategic importance. The strategic importance of the wheat used in pasta production aside, its quality is another noteworthy aspect. Bruneel et al. (2010) underscored the paramount importance of the quality of wheat utilized in pasta production, asserting that the nutritional characteristics of pasta vary depending on the type of wheat employed. Correspondingly, Hare (2017) emphasized the correlation between the quality of the wheat used and the resulting pasta quality. Menesatti and Bucarelli (2007), in their study, accentuated that achieving high quality in the pasta sector entails elevated costs. They elucidated that consumers with a strong inclination to pay value for pasta crafted through traditional production methods for its superior quality are willing to invest in such premium pasta without hesitation. In addition, Simeone et al. (2015) highlighted in their study on the Italian pasta sector that pasta prices play a crucial role in shaping competitive strategies. In a parallel vein, Cacchiarelli and Sorrentino (2018) identified the effectiveness of regulations imposed by market regulators in pasta markets. They specifically noted that regulations on wheat have a substantial impact on the pasta supply chain. Quality and market conditions also play a significant role in pasta trade and the supply chain. All these studies indicate that there are various areas providing research opportunities regarding the relationship between the wheat used and the produced pasta. When it comes to research conducted in Türkiye, especially those related to the pasta trade, they have been included in this study. Keskin and Demirbaş (2011) emphasized the potential of the pasta sector in Türkiye during the relevant period in a study highlighting the potential of processed agricultural products in the country. In another study, Özaydın and Karakayacı (2023) examined the structure of the flour and bakery products industry in the food industry, underlining the necessity of imported wheat for pasta exports. Çetin (2020) emphasized the dependence on imports for exports in his study, which investigated agricultural production through foreign trade data. In a study examining the foreign trade structure of wheat and wheat products in Türkiye, Duru et al. (2019) identified that wheat was imported through the inward processing regime and exported as wheat-based products. Turhan (2018), in a study analyzing the competitiveness of the pasta sector, determined that Türkiye has developed competitive capabilities in the global pasta markets. In addition to these studies, some research highlights the presence of pasta production facilities in Türkiye equipped with leading technologies (Varlık, 2021). Furthermore, it is mentioned that certain cities in Türkiye could make significant contributions to wheat production, which is essential for pasta manufacturing (Acibuca, 2021). ISSN 1392-1258 eISSN 2424-6166 Ekonomika. 2024, vol. 103(2) 50 As observed up to this point in the study, Türkiye stands out as a significant hub for pasta production. Moreover, it has the capability to produce the wheat necessary for pasta manufacturing; however, for various reasons, the wheat produced is not sufficient to meet the required quantity for export. Çığ et al. (2022) explained this situation by stating that Turkey produces enough wheat for its own consumption but imports wheat for pasta exports by taking advantage of the inward processing regime. Despite the inherent potential for Türkiye to be a pasta exporter based on the Factor Endowment Theory, scientific studies emphasizing the necessity of importing wheat have contributed to the formulation of hypotheses in this research. As indicated in the data and methods section of the study, there are ideas suggesting that the prices determined by the countries from which Türkiye imports the most wheat could be related to Türkiye’s pasta export quantity. Nevertheless, an entire model should not be built solely on the structure of imported raw materials. Therefore, it would be appropriate to include not only the purchase of imported raw materials but also the foreign currencies obtained in exchange for exports in the research. In other words, the exchange rate variable is also a crucial factor affecting exports, particularly for developing countries such as Türkiye. Various outcomes can be observed in studies investigating the influence of the exchange rate on trade. While some studies argue that exchange rate volatility reduces foreign trade (Baak et al., 2007; Cheung & Sengupta, 2013), other studies have found that exchange rate volatility does not affect exports (Lee & Masih, 2018). Of course, there are also studies observing that exchange rate volatility increases exports (Kasman & Kasman, 2005; Kılıç and Yıldırım, 2015). Similar studies exist regarding the impact of exchange rates on Türkiye’s exports. Aktaş (2012) stated that the exchange rate does not affect exports, Nazlıoğlu (2013) found that changes in the exchange rate have different effects on sectors’ exports, Uysal and Doğru (2013) indicated that exports decrease as the exchange rate increases, and Karakaş and Erdal (2017) mentioned that agricultural product exports increase as the exchange rate rises. Considering these studies, the model determined for the research in the next section is appropriate in terms of theory and literature. 3. Data and Methodology 3.1. Data Econometric model of the study explains Türkiye’s pasta exports using variables such as Russia’s wheat export price, Ukraine’s wheat export price, Bulgaria’s wheat export price, and the exchange rate. Türkiye’s pasta exports represent the quantity of pasta exported from the country. The prices of countries represent the average wheat selling prices in their exports to the world. The exchange rate shows the Central Bank of the Republic of Türkiye’s USD/ TRY rate. This exchange rate is included in the model due to the relationship between the exchange rate and exports as per classical economic thought. Graphs for these variables are presented in following figures. As the figures for the variables are at significantly different levels, the graphs are presented individually, as depicted in Figures below. Ahmed Yusuf Sarihan. A Study on the Eff ect of Imported Wheat Prices on Türkiye’s Pasta Exports: ARDL Approach 51 Figure 1. Trend of the Pasta Quantity (Kilograms) Exported from Türkiye Turkey’s pasta exports reached 114 million kilograms by the end of 2021, up from 60 million kilograms at the beginning of 2016. At one point, it was also observed that it reached levels of 160 million kilograms. Figure 2. Trend of Russian, Ukrainian and Bulgarian Wheat Prices (USD) ISSN 1392-1258 eISSN 2424-6166 Ekonomika. 2024, vol. 103(2) 52 The changes in the prices per kilogram of wheat, the primary raw material for pasta production, applied by Russia, Ukraine, and Bulgaria, which are among the countries Turkey imports the most from, can be seen in Figure 2. According to this, while Ukraine off ers the lowest prices and Russia off ers the highest, the three prices are quite close to each other. Nevertheless, it is understood that wheat prices have almost doubled over the years. Figure 3. Trend of Exchange Rate in Türkiye (USD/TRY) Finally, the changes in the exchange rate of the Turkish Lira against the US Dollar over the years are presented in Figure 3. Accordingly, the exchange rate has tripled from the beginning of 2016 to the end of 2021. With these information, analyses were conducted using monthly data covering January 2016 to December 2021. The analysis period was determined based on the availability of data for all variables. Defi nitions of the variables and their sources are summarized in Table 3. All variables in the analysis were used in logarithmic form. Table 3. Data and Sources Used in the Research Variable Description* Period (Monthly) Source lnexp Export quantity of Turkish pasta (ton) 2016(1) - 2021(12) International Trade Center lnuwp Average price of Ukranian wheat (USD) 2016(1) - 2021(12) International Trade Center lnrwp Average price of Russian wheat (USD) 2016(1) - 2021(12) International Trade Center lnbwp Average price of Bulgarian wheat (USD) 2016(1) - 2021(12) International Trade Center lnexc Exchange rate (USD/TL) 2016(1) - 2021(12) Central Bank of Turkish Republic * ln= Natural Logarithm of Ahmed Yusuf Sarihan. A Study on the Effect of Imported Wheat Prices on Türkiye’s Pasta Exports: ARDL Approach 59 Table 8. Robustness Check Results Variable FMOLS DOLS Coefficient Std. Error t-Statistic Prob. Coefficient Std. Error t-Statistic Prob. lnrwp -0.3601 0.4306 -0.8363 0.4060 -0.7350 0.6287 -1.1690 0.2477 lnuwp -0.2347 0.5294 -0.4434 0.6589 -0.0559 0.9649 -0.0579 0.9540 lnbwp 0.0803 0.4504 0.1783 0.8591 0.2929 0.7193 0.4072 0.6856 lnexc 0.6454 0.1120 5.7617 0.0000 0.6658 0.1642 4.0551 0.0002 C16.5059 0.5855 28.1917 0.0000 16.5165 0.8194 20.1561 0.0000 RSquared 0.571442 0.65487 4. Discussions In today’s context, where food supply is of utmost importance, this research, recognizing the significance of wheat as a raw material in the production of some of the most fundamental food products, highlights the need for a multifaceted examination. The study aims to determine whether Türkiye’s pasta exports, which are based on wheat, are related to the prices of imported wheat. According to the factor endowment theory, countries export based on the production factors they possess. This study reveals that in the long term, Türkiye’s possession of wheat, whether domestic or imported, serves as a crucial factor in pasta production, contributing to averting crises in exports. It’s evident that short-term crises based on occasional fluctuations in imported product prices do not have lasting effects, and Türkiye’s pasta exports successfully navigate through these short-lived shocks. Even with an increase in the imported wheat price, Türkiye manages to increase its pasta exports by utilizing the purchased wheat. This study shows some similarities with the studies in literature review. Studies explaining the relationship between raw material prices and exports of commodity such as (Nikonenko et al., 2020; McGregor, 2017; Jawaid and Waheed, 2011) have similar results like this research. As of 2022, Türkiye stands fourth in global pasta exports and similarly holds the fourth position in global wheat imports. Despite this balance between production capabilities and exports, Türkiye does engage in wheat exports, albeit in small quantities, as observed from statistical data. Some studies mentioned in the introduction section of this research suggest that raw material prices influence product exports across various industries (Schmitt-Grohe & Uribe, 2018). However, this study focused on Türkiye indicates that imported wheat prices don’t significantly affect pasta exports in the long term. Still, it aligns with similar short-term shock scenarios documented in literature. When considering the wheat supply for pasta exports highlighted in past studies, the occurrence of shortterm shocks becomes an explanatory aspect. Evidently, Türkiye’s pasta exports exhibit a dependence on imported wheat. Hence, despite price fluctuations, wheat procurement continues to support pasta exports. In this context, one of the most critical aspects for Türkiye is the necessity to increase wheat production and, when insufficient, supplement it with imported wheat to sustain exports. Because as Tiess (2010) mentioned price of raw material does not always fit to competition. ISSN 1392-1258 eISSN 2424-6166 Ekonomika. 2024, vol. 103(2) 60 Another finding of this study is the effect of exchange rates on pasta exports. The studies that found that the exchange rate increases exports (Kasman & Kasman, 2005; Kılıç and Yıldırım, 2015; Nazlıoğlu, 2013; Karakaş & Erdal, 2017) have reached a similar conclusion to this research. On the other hand, studies that have observed the negative impact of the exchange rate on exports (Baak et al., 2007; Cheung & Sengupta, 2023; Uysal & Doğru, 2013) have yielded contradictory results thus far. The comparison with the results obtained from this study and the past studies in literature are briefly summarized in the table below. Table 9. Brief Summary of Comparison Between Past Studies in Literature Research Findings Similarity Assestment with this Study Short Run Long Run Kasman & Kasman, 2005 Exchange rate increase -> exports (+) Contradictory Similar Baak et al., 2007 Exchange rate volatility -> foreign trade (-) Contradictory Contradictory Tiess, 2010 Price increases -> international competition (-) Similar Contradictory Cheung & Sengupta, 2013 Exchange rate volatility -> foreign trade (-) Contradictory Contradictory Uysal & Doğru, 2013 Exchange rate increase -> exports (-) Contradictory Contradictory Kılıç & Yıldırım, 2015 Exchange rate increase -> exports (+) Contradictory Similar Khalifa, 2016 Raw material prices -> commodity exports (-) Similar Contradictory Karakaş & Erdal, 2017 Exchange rate increase -> exports (+) Contradictory Similar Niemi, 2018 price increases -> commodity export (-) Similar Contradictory Golikova et al., 2020 Raw material prices -> commodity exports (-) Similar Contradictory Nikonenko et al., 2020 Raw material prices -> commodity exports (-) Similar Contradictory In addition to the results of these studies, it is also possible to discuss the findings in terms of the factor endowment theory and the Marshall-Lerner condition. Accordingly, based on theories from previous years, it is possible to say that Türkiye’s pasta exports are not affected by imported input prices in the long run, due to the strength derived from the current factor conditions. On the other hand, it is observed that an increase in the exchange rate also boosts pasta exports, almost as if fulfilling a classic economic prophecy. 5. Limitations In the literature review section of the study, it is observed that the quality of wheat concerning pasta exports is a topic of interest. The research can be considered limited due to the absence of a variable indicating quality among the variables used in this study. Additionally, since the study is conducted specifically for Türkiye, the three neighboring countries with the highest exports have been selected. For studies involving different countries, wheat prices from additional importing countries could also be considered. From a theoretical perspective, the inability to measure the effect of price elasticity on the Ahmed Yusuf Sarihan. A Study on the Effect of Imported Wheat Prices on Türkiye’s Pasta Exports: ARDL Approach 61 relationship between exchange rates and exports within the context of the Marshall-Lerner condition can also be considered as another limitation of the study. The data set used in the study was selected based on common and up-to-date time intervals. Access to longer-term and broader data sets could be achieved if all countries had complete data entries in the ITC Trademap database. The dataset for the 72-month time series used in the research can also be considered a constraint in this context. The exclusion of data, such as monthly wheat and pasta consumption, among the study variables has hindered the establishment of a more comprehensive model. However, it is worth noting that such data could not be included in the model due to their unavailability on a monthly basis. 6. Conclusion Findings of this study suggest that Türkiye’s pasta export is not significantly influenced by the price of the imported wheat in the long term. In the short term, while there seems to be no effect observed from Russia’s wheat export prices, the occasional increase in Ukraine’s wheat price appears to increase pasta exports, potentially due to Türkiye being both a producer and importer of wheat from various countries. Similarly, examining the effects of Bulgaria’s wheat prices on Turkish pasta exports reveals that price increases sometimes reduce pasta exports and sometimes increase them. However, research findings indicate that all these effects are short-lived. In the long term, it has been observed that Türkiye’s pasta exports are positively affected only by increases in the exchange rate. The fact that Türkiye’s pasta exports are not significantly affected in the long term by the wheat prices from the countries it primarily sources wheat from can be considered a significant opportunity. It has been determined that increases in the exchange rate lead to an increase in Türkiye’s pasta exports in the long run. Considering Türkiye’s status as a developing country, it is natural for businesses to focus on exports to take advantage of the rising exchange rate. Indeed, as can be seen in the relevant figure, the exchange rate has been consistently increasing in Türkiye in recent years. Additionally, given that Türkiye’s trade deficit is a chronic issue, it can be argued that generating foreign currency income is a valid motive for all businesses capable of exporting. In other words, in a developing country where exports cannot meet imports, businesses also seek to position themselves advantageously under the assumption that the exchange rate increase will be persistent. Furthermore, another aspect of the increase in the exchange rate is that businesses exporting from Türkiye may have a price advantage in global competition compared to their international competitors. 7. Theoretical Implications The findings obtained with the model established in this study are significant for international trade, economics, agricultural economics, and macroeconomics research. Particularly noteworthy is the scarcity of studies that examine international trade at the product and ISSN 1392-1258 eISSN 2424-6166 Ekonomika. 2024, vol. 103(2) 62 product group levels, as well as the limited research that presents the impact of supply and raw material variables at the macro level on exported products. In this context, the research findings suggest that delayed effects may be present, especially in the short term. Therefore, it is recommended to conduct similar studies in various countries and with different product groups. Especially within the framework of factor endowment theory, it is observed that traditional international trade theories still hold explanatory power for today’s trade. Additionally price elasticity variables could be used in future studies if available. Therefore, researchers are encouraged to focus on studies that integrate historical theories (such as Factor Endowment Theory and Marshall-Lerner Condition) with contemporary approaches. Particularly, it is believed that research on the export products of developing countries to various countries, goods, and time periods, tested with diverse methods, should be encouraged to enhance the understanding of international trade. In addition to all this, it is recommended not to overlook the exchange rate variable in export studies, considering that the classic economic view, which suggests that exports also increase with an increase in the exchange rate is once again proven correct. 8. Practical Implications The research results suggest that there is not only a responsibility for pasta producers but also for policymakers. Although not included in the model of this study, it can be said that considering the emphasized quality of raw materials in the literature, imported wheat should also be carefully selected for the country in this regard. It is accurate to say that the price of wheat to be imported into the country need to be inspected, and tariff measures should be taken to ensure that local wheat producers can compete without being harmed. Furthermore, considering Türkiye’s consumption of wheat-based products from a health perspective, wheat imports should be shaped according to the health certificate requirements of leading countries in the world. In addition, considering the long-term impact of the exchange rate on pasta exports, Türkiye’s monetary and fiscal policies regarding the exchange rate are noteworthy. Indeed, although the sudden increases seen in recent years may present a positive picture in terms of foreign currency earnings for exporters, it can be said that proper decisions need to be made considering the possibility of increased costs being covered with foreign currency. Since the competitive performance of exporters in the international market will also depend on the balance of income and expenses, effective management of the exchange rate is crucial for both governments and companies to minimize risks. References Acibuca, V. (2021). Mardin ilinde makarnalık buğday üretimi ve üreticilerin sorunları. MAS Journal of Applied Sciences, 6(4), 977-987. Aksoylu, D., & Karaalp-Orhan, H. S. (2022). AB ortak tarim politikasi çerçevesinde Türkiye ve seçili doğu avrupa ülkeleri karşilaştirilmali bir analiz. Mehmet Akif Ersoy Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 9(1), 172-201. Ahmed Yusuf Sarihan. 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