International Conference on Eurasian Economies
11-13 June 2019 – Famagusta, Turkish Republic of Northern Cyprus
Paper properties
Paper ID : 2261
Status : Paper published
Language : Turkish
Topic : International Trade and Globalization
Presenter: Dr. Esma Erdoğan
Session : 3B Büyüme-Teknoloji
Testing the Validity of Linder Hypothesis Using Gravity Model: The Case of Turkey and Selected Transition Economies
Linder Hipotezinin Geçerliliğinin Çekim Modeli ile Test Edilmesi: Türkiye ve Seçilmiş Geçiş Ekonomileri
- Prof. Dr. Harun Bal (Çukurova University, Türkiye)
- Asst. Prof. Dr. Müge Manga (Erzincan Binali Yıldırım University, Türkiye)
- Dr. Esma Erdoğan (Çukurova University, Türkiye)
Abstract
In this study, the validity of the Linder Hypothesis has been tested based on export and import intensity of foreign trade flows between Turkish economy and selected Transition Countries. According to this hypothesis, the more similar the demand structures and per capita income levels of countries, the more they will trade with one another. The hypothesis uses the difference between the per capita income of countries engaged in foreign trade as the main parameter and indicates that a fall in income difference between two countries increases the validity of the Linder hypothesis by increasing the intensity of foreign trade of the countries. The study considers selected Transition Countries having rising share of foreign trade with Turkey during the period 2001-2017 to examine the validity of Linder Hypothesis in the context of foreign trade flows employing Gravity Models that shows "Aggregate Linder Demand Effect" and panel data analysis. Test results does not support Linder hypothesis in terms of export and import intensity of foreign trade flows between Turkish economy and selected Transition Countries during 2001-2017, rather factor endowment does matter for inter-industry foreign trade.
JEL codes: F10, F14, M10
Bal, Harun, Manga, Müge, Erdoğan, Esma (2019). "Testing the Validity of Linder Hypothesis Using Gravity Model: The Case of Turkey and Selected Transition Economies" in Proceedings of International Conference of Eurasian Economies 2019, pp.187-196, Famagusta, Turkish Republic of Northern Cyprus.
DOI: https://doi.org/10.36880/C11.02261
