Abstract
Turkey's economic ties with neighboring Arab countries have flourished in the past few years. A recently stated pledge to create a regional trade alliance with Turkey, Syria, Lebanon and Jordan is likely to trigger a further expansion of economic integration. This paper starts by reviewing trends in Turkey's bilateral trade relations with Syria, Lebanon and Jordan since 2000. Next, it estimates a formal gravity model aiming to project Turkey's trade potential with its neighbors and compare them with the actual flows in 2000–10. It is demonstrated that while Turkey fully realized its bilateral trade potential vis-à-vis Syria, Lebanon and Jordan, actual bilateral trade of Syria, Lebanon and Jordan with Turkey is significantly below the estimated potential.
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