The Short - And Long -Term Effects of Trade Taxes on Vertical Specialization

Deniz Aytaç and Sabiha Kiliç

Asian Economic and Financial Review, 2014, vol. 4, issue 6, 732-743

Abstract: The aim of this study is to evaluate the effects of taxes on international trade in the short- and long-term on vertical specialization in the case of Turkey, which signed the GATT agreement and entered into the customs union in the process of its accession to the EU. Balassa’s measure of relative exports-imports has been used in the study as the measure of vertical specialization. The relationship between the measure of vertical specialization and customs and import duties has been tested with the ARDL approach for the period 1989-2012. This analysis has shown that there is not a statistically significant relationship between the variables in the short term but that there is a positive and significant relationship between them in the long term. In this sense, it may be stated that taxes on international trade have in Turkey a limited but positive effect on vertical specialization in the long term, even if not in the short term.

Keywords: International trade; Vertical specialization; Trade tax; Optimal taxation; Relative advantage; ARDL. (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:asi:aeafrj:v:4:y:2014:i:6:p:732-743:id:1199

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