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 possible integration: mutual elimination of import tariffs and free movement of labor among regions. The results suggest that all regions (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.