Abstract:

The aim of this study is to analyze the validity of the Linder Hypothesis in Turkey's foreign trade with 37 members of the Organization of Islamic Cooperation (OIC) in the period 2002-2021. According to Linder, who examines international trade from the point of demand, more trade takes place between countries with similar demand structures. The similarity of demand structures can be handled with the average income level. In this context, Turkey's bilateral trade with OIC members is handled with augmented panel gravity model. In the analysis, the Hausman-Taylor method is used, which provides the opportunity to predict the time-invariant variables as well as time-varying variables. According to the estimation results, first of all, in accordance with the gravity model, it has been understood that the per capita GDP sizes of Turkey and the trade partner country have a positive effect on Turkey's foreign trade with the member countries, while the distance between the countries has a negative effect. Secondly, it is noteworthy that the Linder Hypothesis is valid in Turkey's bilateral trade with the said countries. Finally, it is seen that the dummy variables regarding common border and free trade agreements in bilateral trade are meaningless.

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