erc/metu
INTERNATIONAL CONFERENCE IN ECONOMICS  IV
September 13-16, 2000, Ankara

The Determinants of Intra-Industry Trade Pattern of Turkey

Feride Doğaner Gönel (Yıldız Technical University)

Abstract

This paper examines the determinants of intra-industry trade (IIT) of Turkey. The study has organized in two parts. In the first part, the share of Turkey’s IIT was computed from 1977 to 1997, using a sample of 96 2-digit Turkish Chapter Code List industries. In the second part of the study, hypotheses regarding country characteristics of IIT was tested. Two alternative estimation procedures, i.e. the logit transformation analysis and non-linear least squares analysis were used. Using the unadjusted Grubel-Lloyd IIT index as a dependent variable, estimates were made with and without trade imbalance and foreign direct investment in the regression equations. The paper finds that Turkey’s IIT has been growing as a proportion of total trade over the past 20 years. The empirical evidence presented suggests that market sizes, distance and foreign direct investment are all important factors for explaining trends of IIT for Turkey. Finally, it is concluded that when unadjusted Grubel-Lloyd IIT index is used as a dependent variable in a regression analysis of IIT, it is necessary to control for trade imbalances.

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Middle East Technical University
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