IDEAS home Printed from https://ideas.repec.org/p/izm/wpaper/0806.html
   My bibliography  Save this paper

The Determining Role of EU in Turkey's Trade Flows: A Gravity Model Approach

Author

Listed:
  • Ozgul Bilici

    () (Department of Economics, Izmir University of Economics)

  • Erkan Erdil

    () (Department of Economics, Middle East Technical University)

  • I. Hakan Yetkiner

    () (Department of Economics, Izmir University of Economics)

Abstract

This paper aims to determine the role of EU in Turkey’s trade flows by using the gravity model. It also aims to test whether the Customs Union (of EU) that Turkey entered in 1996 made a deviation in Turkey’s trade flows. Regional trade agreements on the one hand create new trade opportunities (trade creation effect). On the other hand, these agreements may also lead to diversion from free trade (trade diversion effect). Turkey’s Customs Union agreement without becoming a member of EU provides a laboratory to researchers to test whether the agreement was significant enough to cause any deviation in Turkey’s trade flow. In the first part of the study, we shortly provide some descriptive statistics related to Turkey’s trade flows with EU to see whether EU has gained any weight in the flows. In the second part, we first develop a gravity model that econometrically designates the determinants of Turkey’s trade flows via panel data approach. Next, we use this equation to test the importance of EU countries in Turkey’s trade flow and whether the flow has been subject to a deviation after the Customs Union agreement. Our findings indicate that EU countries have always been important in Turkey’s trade flow and that Customs Union has increased EU’s importance marginally in determining Turkey’s trade flow.

Suggested Citation

  • Ozgul Bilici & Erkan Erdil & I. Hakan Yetkiner, 2008. "The Determining Role of EU in Turkey's Trade Flows: A Gravity Model Approach," Working Papers 0806, Izmir University of Economics.
    • Handle: RePEc:izm:wpaper:0806
    as

    Download full text from publisher

    File URL: http://eco.ieu.edu.tr/wp-content/wp0806.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Lall, Sanjaya, 1998. "Exports of Manufactures by Developing Countries: Emerging Patterns of Trade and Location," Oxford Review of Economic Policy, Oxford University Press, vol. 14(2), pages 54-73, Summer.
    2. Bergstrand, Jeffrey H, 1985. "The Gravity Equation in International Trade: Some Microeconomic Foundations and Empirical Evidence," The Review of Economics and Statistics, MIT Press, vol. 67(3), pages 474-481, August.
    3. Jon Haveman & David Hummels, 2004. "Alternative hypotheses and the volume of trade: the gravity equation and the extent of specialization," Canadian Journal of Economics, Canadian Economics Association, vol. 37(1), pages 199-218, February.
    4. Inmaculada Martínez-Zarzoso & Felicitas Nowak-Lehmann, 2003. "Augmented Gravity Model: An Empirical Application to Mercosur-European Union Trade Flows," Journal of Applied Economics, Universidad del CEMA, vol. 6, pages 291-316, November.
    5. Bergstrand, Jeffrey H, 1990. "The Heckscher-Ohlin-Samuelson Model, the Linder Hypothesis and the Determinants of Bilateral Intra-industry Trade," Economic Journal, Royal Economic Society, vol. 100(403), pages 1216-1229, December.
    6. Helpman, Elhanan, 1987. "Imperfect competition and international trade: Evidence from fourteen industrial countries," Journal of the Japanese and International Economies, Elsevier, vol. 1(1), pages 62-81, March.
    7. Curry, B & George, K D, 1983. "Industrial Concentration: A Survey," Journal of Industrial Economics, Wiley Blackwell, vol. 31(3), pages 203-255, March.
    8. Lall, Sanjaya, 1998. "Erratum: Exports of Manufactures by Developing Countries: Emerging Patterns of Trade and Location," Oxford Review of Economic Policy, Oxford University Press, vol. 14(3), pages 168-168, Autumn.
    9. Antonucci, Daniele & Manzocchi, Stefano, 2006. "Does Turkey have a special trade relation with the EU?: A gravity model approach," Economic Systems, Elsevier, vol. 30(2), pages 157-169, June.
    10. Sawkut Rojid, 2006. "COMESA trade potential: a gravity approach," Applied Economics Letters, Taylor & Francis Journals, vol. 13(14), pages 947-951.
    11. repec:ags:jaecon:43996 is not listed on IDEAS
    12. Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, vol. 69(1), pages 106-116, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Christopher S. P. Magee, 2016. "Trade creation, trade diversion, and the general equilibrium effects of regional trade agreements: a study of the European Community–Turkey customs union," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(2), pages 383-399, May.
    2. repec:bla:jcmkts:v:55:y:2017:i:3:p:419-431 is not listed on IDEAS
    3. Türkcan, Kemal, 2014. "Investigating the Role of Extensive Margin, Intensive Margin, Price and Quantity Components on Turkey’s Export Growth during 1998-2011," MPRA Paper 53292, University Library of Munich, Germany.
    4. Zumrut Imamoglu & Baris Soybilgen, 2012. "The Role of Economic Size and Distance in Turkey's Exports," Research Briefs 135, Bahcesehir University, Betam.
    5. Miran, Bülent & Atiş, Ela & Bektaȿ, Zerrin & Salalı, Ece & Cankurt, Murat, 2013. "An Analysis of International Raisin Trade: A Gravity Model Approach," 2013 Conference (57th), February 5-8, 2013, Sydney, Australia 152200, Australian Agricultural and Resource Economics Society.

    More about this item

    Keywords

    Gravity model; Turkey; EU; Panel Data; Customs Union;

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:izm:wpaper:0806. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ayla Ogus Binatli). General contact details of provider: http://edirc.repec.org/data/deieutr.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.