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Costs of a missing FTA: the case of Turkey and Algeria

Author

Listed:
  • N. Nergiz Dincer

    (TED University
    TED University Trade Research Center
    Economic Research Forum)

  • Ayça Tekin-Koru

    (TED University
    TED University Trade Research Center)

  • Pinar Yaşar

    (The World Bank
    Hacettepe University)

Abstract

Turkey has been deeply integrated with the EU, its largest trading partner, particularly following the Customs Union agreement in 1996. However, the free trade agreements (FTAs) signed by the EU with third party countries may create some unfair competitive pressures, market share and welfare losses for Turkey. This study investigates the impact of the FTA signed by Algeria and the EU in 2005 on Turkey’s trade flows. Covering 181 countries, a difference-in-differences analysis embedded in an extended gravity framework is employed to quantify the trade effects of the EU-Algeria FTA for the period of 1996–2013. Our findings suggest that bilateral trade between Turkey and Algeria is affected adversely due to the FTA. The counterfactual analysis shows that Turkish exports and imports to/from Algeria could have been 12 and 17% higher, respectively, had there been no FTA between the EU and Algeria.

Suggested Citation

  • N. Nergiz Dincer & Ayça Tekin-Koru & Pinar Yaşar, 2018. "Costs of a missing FTA: the case of Turkey and Algeria," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 45(3), pages 489-505, August.
    • Handle: RePEc:kap:empiri:v:45:y:2018:i:3:d:10.1007_s10663-017-9369-3
    DOI: 10.1007/s10663-017-9369-3
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    More about this item

    Keywords

    FTA; Turkey; Customs union; Gravity model;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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