Abstract:

Traditional foreign trade theories explain inter-industry foreign trade that arises from factor endowment differences. In other words, traditional foreign trade theories argue that inter-industry trade takes place between countries with different levels of development. In this context, these theories are insufficient to explain foreign trade between countries with same levels of development. The concept of intra-industry trade was used to explain foreign trade between developed countries, and then it was also used for foreign trade between countries with different levels of development. When evaluated from this point of view, the concept of intra-industry trade has an important place in both economics and foreign trade literature. When Turkey's foreign trade data is examined; EU (European Union) as a foreign trade partner and the manufacturing industry as a sector come to the fore. The main purpose of this study is to measure intra-industry trade between Turkey and EU countries in the manufacturing industry for the period 1996-2017 and is analyzing the determinants. In the literature, there are many indices with static, semi-dynamic and dynamic properties to measure intra-industry trade. In this study, while measuring the level of intra-industry trade, GL (Grubel-Lloyd) index was used. Also, in the analysis that is revealed the determinants of intra-industry trade, AE (Aquino) index in addition to GL index was used. System Generalized Method of Moments (SGMM) was used for revealing the determinants of intra-industry trade between Turkey and EU countries Turkey in the manufacturing industry. According to the GL index, more than 40% of foreign trade of Turkey’s manufacturing industry with Spain and Italy consists of intra-industry trade. According to the SGMM results, the variables that are insignificant in both the GL index and the AE index are the trade openness of the trading partner and border neighborhood. SGMM results show that the increases of the GDP (gross domestic product) difference, GDP per capita difference, trade openness difference, distance between the two countries and trade imbalance decrease intra-industry trade in the manufacturing industry. In addition, the increases of the average GDP of two countries, Turkey’s trade openness against the trading partner and trade intensity raises intra-industry trade in the manufacturing industry. It was determined that sharing the same sea, which is considered as a dummy variable in the analysis, positively affects intra-industry trade.

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