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The Effect of Inward Processing Regime on Foreign Trade: The Case of Automotives and White Goods

Author

Listed:
  • Aynur Onur Aslan

    (Istanbul University-Cerrahpasa, Vocational School of Social Sciences, International Trade, İstanbul, Turkey)

  • Mithat Zeki Dinçer

    (Istanbul University, Faculty of Economics, Department of Economic Policy, İstanbul, Turkey)

Abstract

Although the Inward Processing Regime (IPR) has been criticized for increasing imports and dependence on them in production, it provides foreign exchange inflow to the country thanks to export. IPR, which is one of the most economically effective customs regimes of all export promotion practices in Turkey, ensures $65 billion export for $28 billion import. Thus, IPR affects current deficit positively. Ford Otosan and Arçelik, which operate under the Koç Group, one of the most important conglomerates in Turkey, also use IPR. These two companies carry out almost all their exports within the scope of IPR and provide a total of approx. $8.5 billion foreign currency inflow to Turkey. This amount meets about 14% of exports under IPR. In short, these two companies are constituent factors of the Turkish economy in addition to the employment they provide as well as the foreign currency they bring into the country. The aim of this study is to reveal the positive effect of IPR on export by using exemplary leading company data in the automotive and white goods sectors. Social science analysis techniques, observation, interview, academic data analysis, document analysis, qualitative data collection methods and fieldwork support were used to achieve this aim.

Suggested Citation

  • Aynur Onur Aslan & Mithat Zeki Dinçer, 2020. "The Effect of Inward Processing Regime on Foreign Trade: The Case of Automotives and White Goods," Istanbul Journal of Economics-Istanbul Iktisat Dergisi, Istanbul University, Faculty of Economics, vol. 70(2), pages 437-450, December.
    • Handle: RePEc:ist:journl:v:70:y:2020:i:2:p:437-450
    DOI: 10.26650/ISTJECON2020-0011
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