Determinats of Turkish foreign trade: An analysis using the gravity model

International trade has become increasingly important in the economic literature in recent years. While traditionally international trade covered a limited number of goods and services, with the emergence of new needs, the development of new Technologies in international communication and transportation has increased the scope and size of international trade transactions over time. Changing conditions over time has led to the development of different theories and models regarding international trade. In this study, the economic developments in Turkey have been examined from the last years of the Ottoman Empire to the present. Turkey's foreign trade since 1923 has been analyzed in detail. Data on import, export, foreign trade balance, foreign trade volumesa and import coverage of export are examined for the period of 1923-1995, and the possible causes of changes in imports and exports have been offerred. For the period 1995-2015 Turkey's imports and exports were examined in five-year periods with product and country basis. Gravity model analysis was performed by forming different equations for Turkey's imports and exports. While the export equations are estimated by using the data of 108 countries between 1990 and 2016, import equations are estimated by using the data of 63 countries between 1993-2015. Inflation, exchange rate, customs duty, free trade agreements, European Customs Union, Organization of Islamic Cooperation, neighboring countries and Black Sea Economic Cooperation variables are discussed as possible determinants of Turkish foreign trade. It is seen that the standard gravity model variables are statistically significant in all equations and the obtained coefficients for this variables are consistent with the economic expectation. Variables of the Augmented Gravity model are found different in the final equations obtained for import and export Keywords: Gravity Model, Panel Data, Export, Import, International Trade