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Environmental Impact of Customs Union Agreement with EU on Turkey’s Trade in Manufacturing Industry

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Author Info

  • Elif Akbostanci

    ()
    (Department of Economics, METU)

  • G. Ipek Tunc

    ()
    (Department of Economics, METU)

  • Serap Turut-Asik

    (Department of Economics, METU)

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    Abstract

    In this study, we analyze Turkey’s manufacturing industry trade by estimating sectoral import and export demand equations for 1980-2000. The study aims to understand whether the trade in the manufacturing industry complies with pollution haven hypothesis, and whether the free trade environment provided by the customs union (CU) agreement altered the trade pattern of the clean and dirty industries. Results of our econometric models have shown that while CU positively affects the import demand, it does not have any significant impact on the export demand of Turkish manufacturing industry. In terms of the environmental impact, distinction between clean and dirty industries turns out to be significant for both import and export demand. In general, our findings suggest that both clean and dirty industries’ import demand increase during the study period. In terms of export demand, clean industries’ export demand declines whereas dirty industries’ export demand increases compared to the total demand.

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    File URL: http://www.erc.metu.edu.tr/menu/series06/0603.pdf
    File Function: First version, 2006
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    Bibliographic Info

    Paper provided by ERC - Economic Research Center, Middle East Technical University in its series ERC Working Papers with number 0603.

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    Length: 25 pages
    Date of creation: Mar 2006
    Date of revision: Mar 2006
    Handle: RePEc:met:wpaper:0603

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    Web page: http://www.erc.metu.edu.tr
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    Keywords: Environmental impact analysis; EU; Turkey; manufacturing industry;

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    1. Jeffrey A. Frankel & Andrew K. Rose, 2002. "Is Trade Good or Bad for the Environment? Sorting Out the Causality," NBER Working Papers 9201, National Bureau of Economic Research, Inc.
    2. Eskeland, Gunnar S. & Harrison, Ann E., 2003. "Moving to greener pastures? Multinationals and the pollution haven hypothesis," Journal of Development Economics, Elsevier, vol. 70(1), pages 1-23, February.
    3. Adam B. Jaffe et al., 1995. "Environmental Regulation and the Competitiveness of U.S. Manufacturing: What Does the Evidence Tell Us?," Journal of Economic Literature, American Economic Association, vol. 33(1), pages 132-163, March.
    4. Goldstein, Morris & Khan, Mohsin S., 1985. "Income and price effects in foreign trade," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 2, chapter 20, pages 1041-1105 Elsevier.
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