Intraindustry trade and labor market adjustment in Turkey - Another piece of puzzling evidence?

Erlat G. , Erlat H.

EMERGING MARKETS FINANCE AND TRADE, vol.42, no.5, pp.5-27, 2006 (Journal Indexed in SSCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 42 Issue: 5
  • Publication Date: 2006
  • Doi Number: 10.2753/ree1540-496x420501
  • Page Numbers: pp.5-27
  • Keywords: intraindustry trade, panel data models, structural adjustment hypothesis, EMPLOYMENT, INDUSTRY


After important policy changes in 1980, Turkey's trade expanded considerably. Although interindustry trade remained predominant, intraindustry trade (IIT) increased substantially. This paper investigates whether the increase in HT contributed to reducing adjustment costs due to trade expansion. We undertook an econometric approach and considered three-digit International Standard Industry Classification classified data. We used a model developed by Brulhart and Thorpe (2000)for Malaysia, both in static and dynamic forms. Our static results indicate that, if there is any contribution that HT makes to adjustments in the manufacturing industries of Turkey, it is either nonexistent, if measured by changes in the Grubel-Lloyd index, or in the opposite direction, if measured by the marginal HT index (A). The dynamic results are somewhat more encouraging, in that the coefficients of the lagged A and Grubel-Lloyd indexes are negative and significant when three yearly changes are considered, but the overall results are not sufficient to conclude that the structural adjustment hypothesis holds for Turkey.