Trend in Turkey's terms of trade from 1982 to 2011

Abstract

This study analyzes the trends in Turkey's terms of trade over the thirty-year period from 1982 to 2011. Accordingly the structure of Turkish international trade is first analyzed according to different product groups, and the results reveal that Turkey is both an exporter and importer of intermediate goods. Second, we assess whether the terms have turned against Turkey (as argued in the Prebisch-Singer thesis) in light of the findings on the net barter terms of trade, gross barter terms of trade and income terms of trade for the post-1980 period (1982 to 2011). Consequently, we find that the Prebisch-Singer thesis is not valid for Turkey for the 1982-2011 period. International trade is in Turkey's favor. Moreover, after the relationship between the real import and export volume indices is tested by employing a vector auto-regression (VAR) model, we find that Turkish exports are affected by imports, which indicates the import dependency of Turkish exports.