The intra-industry trade in the trade between Turkey and EU and developments after the Customs Union

Since 1960?s, the empirical studies have been shown that the traditional international trade theories have become insufficient to explain the global trade patterns. In this vein, the intra-industry trade (ITT) framework, which is defined as the simultaneous export and import of commodities classified under the same industry, has gained considerable importance in understanding new realities in the world trade. This study emphasizes the relevance of ITT for the trade between Turkey and EU.The main objective of this thesis is to empirically analyze the state of ITT in the Turkey-EU trade. The questions of whether the Turkish trade with EU has been more of ITT or inter-industry type and whether there is a structural change in its degree through time could be very important for analyzing the trade structure and policy-making process.For this aim, ITT has been calculated for Turkey-EU trade by using SITC Rev.3- 3 digit level data for 1990-2007. The study has been shown that a significant portion of trade between Turkey and EU has been taken the form of ITT. However, though there has been a steady increase in ITT level over the 1990-2007 period, inter alia, as the result of Customs Union Arrangement, the Turkey-EU trade has been still of inter-industry type rather than being of ITT.