The effect of the Trans-Anatolian Natural Gas Pipeline Project (TANAP) on industrial production in Turkey

Abstract

Purpose - The purpose of this study is to investigate the effect of the Trans-Anatolian Natural Gas Pipeline Project (TANAP) on industrial production in Turkey. The TANAP is a project which ensures the security of the country's natural gas supply and encourages a decrease in energy prices. So, this study investigates TANAP's efforts to decrease gas prices, as well as the effects of gas prices on industrial production. Design/methodology/approach - The data include gas prices and industrial production index series. Gas prices are approached for industrial users (nonresidential) in Turkey and industrial production index series have been discussed for whole industries. The Johansen cointegration method has been used to analyze the data, spanning the period from 2005M01 to 2015M11. Findings - Results indicate that the decrease in the energy prices has a positive effect on the industrial production index, which is accepted as a basic sign of economic growth. Accordingly, it has been proved that gas priced had a significant effect on industrial production in Turkish economy during the respective periods. Research limitations/implications - This study has supported the argument that TANAP helps to decrease gas prices in Turkey. It can be said that a decrease in gas price is expected to have positive effect on industrial production in the long-term. Originality/value - The present study shows that projects such as TANAP can help gas importing countries like Turkey to decrease gas prices and increase industrial production. In this context, this study supports projects that decreasing gas prices for energy importing countries in the long term.