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The Impact of a Customs Union between Turkey and the EU on Turkey's Exports to the EU

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Listed:
  • Felicitas Nowak-Lehmann Danzinger
  • Dierk Herzer
  • Inmaculada Martinez-Zarzoso
  • Sebastian Vollmer

Abstract

This paper investigates Turkey's sectoral trade flows to the EU based on panel data from the period 1988 to 2002. Turkey's sixteen most important export sectors are analysed. Emphasis is placed on the role of price competition, EU protection, and transport costs in the export trade between Turkey and the EU. The empirical model used is an extended version of the gravity model. This study is also a contribution to the current discussion of whether Turkey should be granted full EU membership or a privileged partnership with the EU, which for Turkey would mean improved access to the EU market for its products, among other benefits. Our investigation focuses on the latter policy outcome: the impact of deepening the Customs Union between Turkey and the EU and applying the Common Agricultural Policy (CAP) to Turkish agricultural exports. To this end, the impact of the 1996 Customs Union covering most industrial goods and processed agricultural goods, is evaluated on a sectoral level. We also perform simulations to quantify the impact of the potential inclusion of agricultural goods, as well as iron and steel and products thereof, into the full Customs Union between Turkey and the EU which is still to come.

Suggested Citation

  • Felicitas Nowak-Lehmann Danzinger & Dierk Herzer & Inmaculada Martinez-Zarzoso & Sebastian Vollmer, 2005. "The Impact of a Customs Union between Turkey and the EU on Turkey's Exports to the EU," Discussion Papers of DIW Berlin 483, DIW Berlin, German Institute for Economic Research.
    • Handle: RePEc:diw:diwwpp:dp483
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    References listed on IDEAS

    as
    1. Martinez-Zarzoso, Inmaculada & Nowak-Lehmann, Felicitas, 2003. "Augmented Gravity Model: An Empirical Application to Mercosur-European Union Trade Flows," Journal of Applied Economics, Universidad del CEMA, vol. 6(2), pages 1-26, November.
    2. Inmaculada Martinez-Zarzoso & Felicitas Nowak-Lehmann D., 2004. "Economic and Geographical Distance: Explaining Mercosur Sectoral Exports to the EU," Open Economies Review, Springer, vol. 15(3), pages 291-314, July.
    3. Soloaga, Isidro & Alan Wintersb, L., 2001. "Regionalism in the nineties: what effect on trade?," The North American Journal of Economics and Finance, Elsevier, vol. 12(1), pages 1-29, March.
    4. Laszlo Matyas, 1997. "Proper Econometric Specification of the Gravity Model," The World Economy, Wiley Blackwell, vol. 20(3), pages 363-368, May.
    5. Inmaculada Martínez-Zarzoso & Felicitas Nowak-Lehmann D., 2003. "Augmented gravity model: An empirical application to Mercosur- European trade flows," International Trade 0309019, University Library of Munich, Germany.
    6. Shang-Jin Wei, 1996. "Intra-National versus International Trade: How Stubborn are Nations in Global Integration?," NBER Working Papers 5531, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Gravity model; Panel data; Sectoral trade flows; Price competition; Transport;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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