SUMMER 2013 / NUMBER 66

Economic Implications of Turkey's Regional Integration with its Neighborhood

This paper analyzes the impact of Turkey's regional integration with the neighbourhood in an applied general equilibrium framework. The standard GTAP model has been extended to address the two main components of Turkey's possibleintegration: mutual elimination of import tariffs and freemovement of labor among regions. The results suggest that allregions (Turkey, Russia, Former Soviet Union and the Middle East) would experience welfare gain under trade liberalization policy reform. Labor mobility does not cause considerable changes in real GDP (less than 0.1 percent) through increasing real wages in the labor exporting regions

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