An empirical analysis on foreign trade between Turkey and the BRICS countries

In this thesis, the foreign trade between Turkey and the BRICS, which draws attention in terms of its economic performance, on the base of total and product group is examined with the gravity model approach and the potential foreign trade level between Turkey and the member countries is investigated by using results of the gravity model estimation. In gravity models, total foreign trade and SITC (Rev. 3) 1st level trade were included as dependent variables, trade and the factors affecting foreign trade were examined with Random Effect Driscoll-Kraay Standard Error Models for the 2000-2019 period. In the study, as independent variables, economic size, distance, population, FDI inflows, liner transport connectivity index, trade freedom index and globalization index and as dummy variables common border, common language and regional trade agreements were included. In addition, an evaluation is made for the product groups where the actual trade is below the potential by calculating the RCA index at the SITC (Rev. 3) 2nd step level. According to the empirical findings on the gravity models, the increases in the exporting and importing countries GDP, FDI inflows, the level of integration into the global transportation networks, the level of commercial freedom and globalization and the exporting country's exchange rate affect total foreign trade positively, increases in the exporting and importing countries population and the distance between the countries affect total foreign trade negatively. In addition, speaking a common language and having a common border between countries have a positive effect on foreign trade while existing regional trade agreements between countries create a trade diversion effect. According to the empirical findings on trade of product groups, the increases in the exporting and importing countries GDP and the increase in the exchange rate of the exporting country affect foreign trade positively, increases in the exporting and importing countries population and the distance between the countries affect total foreign trade negatively. As a dummy variable, while the common language has a positive effect on trade, the effect of regional trade agreements is usually trade diversion. According to the potential foreign trade analysis results, during the period of 2000-2019, Turkey's trade with Brazil is close to or equal to potential, trade with Russia and South Africa is above the potential and while the trade with China and India was close to potential, is below the potential the last years of period. In the potential foreign trade analysis on product groups trade, results were obtained for product groups mostly different.