The effect of common currency union on trade:Turkey - European union sample

The European Union is the most developed integration among its counterparts. Focusing on the customs union at first, the European Union developed and applied common policies in time. After the expiry of the Bretton Woods System, the economic and monetary union among the European countries became inevitable. It is a great evolution for the international money system and the other countries that Euro entered into the circulation on 1 January, 2002 after a long process. The international currencies of the member nations disappeared and Euro took their place as the common currency. Turkey is one of the countries which was effected most by the change that started with Euro, because the European Union members has an important role in Turkey?s foreign trades. Turkey started the protocol of customs union with the European Union and Turkey?s candidacy process is still in progress. On the way to the economic and monetary union, the cohesion to the Maastricht Criteria is important. Since the conferences about the membership started on 3 October 2005, the criteria related to economic and monetary union needs to be applied. In this study, the effect of the economic and monetary union on Turkish economy, especially on the foreign trades, is examined by the help of the Gravity Model.