Connectivity and Corridors: Türkiye’s Middle Corridor Vision through International Trade

Abstract

This paper investigates the potential impact of Türkiye on international trade with Middle Corridor (MC) countries, taking into account its geopolitical and strategic role over the past two decades and evaluating how the corridor affects connectivity between partner countries. The study employs a gravity model (GM) to investigate the impact of trade flows on the Turkish economy. Our analysis utilizes a panel dataset spanning from 1990 to 2023. It incorporates a range of estimators, including the Poisson pseudo-maximum likelihood (PPML), the fixed effects (FE) estimator, and the random effects (RE) estimator. The findings obtained from all estimation models demonstrate that the gravity model accurately represents Türkiye’s foreign trade with MC countries. In particular, the findings based on all the estimators suggest a positive correlation between the GDP per capita of importing countries and Türkiye’s exports to the member states of the MC. More precisely, the results of the RE model indicate that a 1% increase in the average per capita gross domestic product of an importer country is associated with a 0.92% increase in exports from Türkiye to that country. The findings also indicated a positive correlation between the religious and linguistic homogeneity of the two countries and their membership in the MC. Overall, our results suggest that enhancing economic relations with the nations involved in the MC presents an advantageous scenario and promises significant policy benefits.