EFFECTS OF EUROPEAN UNION-TURKEY CUSTOMS UNION ON TURKISH FOREIGN TRADE

Yılmaz Bayar and Halil Ozekicioglu
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Yılmaz Bayar: Karabuk University, Turkey
Halil Ozekicioglu: Cumhuriyet University, Turkey

Studies in Business and Economics, 2014, vol. 9, issue 2, 16-26

Abstract: Financial liberalization together with the globalization led countries to constitute economic integration in form of preferential trading area, free trade area and customs union especially since 1980s. European Union, which has been at the stage of Economic and Monetary Union, is one of the biggest and most advanced economic integration models in the world. This study examines the effects of European Union-Turkey Customs Union on Turkish foreign trade between 1995-2011 by using static analysis and Balassa index. We found that there was trade creation effect and no trade diversion effect of the Customs Union. Moreover Turkey increased its comparative advantage on 50 product classes and lost its comparative advantage on 17 product classes, while Turkey sustained its comparative advantage on 188 product classes relative to European Union after establishment of the Customs Union.

Keywords: Customs Union Theory; Comparative Advantages; Static Analysis; Balassa Index (search for similar items in EconPapers)
Date: 2014
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