AN EVALUATION OF BILATERAL TRADE BETWEEN TURKEY AND BALKANS: BASED ON GRAVITY TRADE MODEL AND LINDER HYPOTHESIS 241

Abstract

2008 crisis had crucial impact on economic indicators of the countries. In thispaper, we are going to evaluate the influence of the crisis on bilateral traderelations between Balkan countries and Turkey. Broadly speaking; in the first stage,export, import volumes and trade deficits and surpluses between Turkey and 11 Balkan countries is analyzed in comparative perspective. In second stage,theoretical background of the study is going to be based on the Tinbergen's Gravity Model that is regarded as workhorse of the empirical international trade literature.Obviously, just depending on economic magnitude and distance in order to explainthe trade relations between Turkey and the other Balkan countries can givemisleading results; to prevent this case; control variables like religion, existence oftrade agreement and Eurovision Song Contest voting scores as cultural proxy isadded to the regression model. In this respect, paper not only takes into account the supply side determinants of the trade but also considers the effects of demand sideby taking Linder Hypothesis as reference point for the time span of 2004 through 2011.To sum, paper aims to test the explicative power of sociological concepthomophily - geographical, cultural and preferential (similarities in demand structure) closeness - for the trade of Turkey with Balkan countries.