Structural Change in Turkish External Trade: Evidence from BEC Sectors

Abstract

We investigate exports and imports of Turkey for the main BEC sectors. We find that the trade equations do not remain stable when an endogenous regime change is taken account. Exports and imports are basically determined by world output and domestic income, respectively, with substantially high elasticities. Consistent with the fact that Turkish integration to global value chains has substantaily increased, exchange rate elasticities decrease during the recent period. The external income elasticity of exports is substantially higher than the domestic income elasticity of imports.