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Empirica

, Volume 45, Issue 3, pp 489–505 | Cite as

Costs of a missing FTA: the case of Turkey and Algeria

  • N. Nergiz Dincer
  • Ayça Tekin-Koru
  • Pinar Yaşar
Original Paper
  • 174 Downloads

Abstract

Turkey has been deeply integrated with the EU, its largest trading partner, particularly following the Customs Union agreement in 1996. However, the free trade agreements (FTAs) signed by the EU with third party countries may create some unfair competitive pressures, market share and welfare losses for Turkey. This study investigates the impact of the FTA signed by Algeria and the EU in 2005 on Turkey’s trade flows. Covering 181 countries, a difference-in-differences analysis embedded in an extended gravity framework is employed to quantify the trade effects of the EU-Algeria FTA for the period of 1996–2013. Our findings suggest that bilateral trade between Turkey and Algeria is affected adversely due to the FTA. The counterfactual analysis shows that Turkish exports and imports to/from Algeria could have been 12 and 17% higher, respectively, had there been no FTA between the EU and Algeria.

Keywords

FTA Turkey Customs union Gravity model 

JEL Classification

F14 F15 F41 

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Copyright information

© Springer Science+Business Media New York 2017

Authors and Affiliations

  • N. Nergiz Dincer
    • 1
    • 4
    • 5
  • Ayça Tekin-Koru
    • 1
    • 4
  • Pinar Yaşar
    • 2
    • 3
  1. 1.Department of EconomicsTED UniversityAnkaraTurkey
  2. 2.The World BankAnkaraTurkey
  3. 3.Department of EconomicsHacettepe UniversityAnkaraTurkey
  4. 4.TED University Trade Research CenterAnkaraTurkey
  5. 5.Economic Research ForumCairoEgypt

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