Foreign trade has been a principal tool of the economic policies implemented in Turkey since the foundation of the Republic in 1923. In parallel with the significant developments in the national and global economies, several structural transformations occurred in foreign trade patterns and policies of Turkey. Political approaches varied from strictly protectionist trade regimes to semi-open models and free trade regimes. Previously implemented protectionist trade policies were abandoned in the 1980s for the current open economic policy based on export-led growth model. All these facts led to drastic changes in the composition of goods subject to both Turkey's exports and imports. This chapter examines the fundamental shifts and changes in Turkey's foreign trade by reviewing historical developments, and specifies the existing structural problems in Turkey's foreign trade by analyzing detailed trade data.
TopIntroduction
Turkey is an emerging economy with strong and dynamic links to global economy. Trade openness ratio was approximately 55% in 2017 (World Bank, 2019). However, this ratio was around 10% before 1980. This fact alone indicates a major shift in Turkish economy by means of trade policy. As noted in the related literature, the pace of economic transformation via trade is faster in developing countries than advanced economies (Krugman, 1995; Saygılı and Saygılı, 2010). When Turkey’s international trade indicators are examined, various trends become obvious such as significant changes in the composition of exports and imports. Moreover, Turkey is a member of the WTO, a member of the Customs Union of the EU and signed many other free trade agreements with third countries. Such international agreements have considerably shaped the framework of international trade patterns and have narrowed the area for the design and implementation of an independent national foreign trade policy for Turkey and other developing countries.
This study aims to review the historical development of Turkey’s foreign trade policies and reveal the origins of the current problems related to trade which hinder the country’s growth and development process.
In this context, firstly a chronological presentation of major national and international phenomena is going to be summarized in the first section in order to sort out the determinants of structural shifts in trade patterns.
Then in the second section, detailed trade data on sector and sub-sector level are going to be analyzed in order to comprehend the current situation of trade structures of Turkey. The data covers the time spanning from 1980 to 2017.
Lastly, major findings about the current problems of Turkey’s foreign trade and an evaluation on the country’s prevailing trade policy are going to be reviewed in concluding remarks.