DOI: 10.53443/anadoluibfd.1931796 ISSN: 2687-184X

AN ANALYSIS OF TRADE FLOWS BETWEEN TÜRKIYE AND THE MIDDLE EAST AND NORTH AFRICA (MENA) COUNTRIES USING A GRAVITY MODEL APPROACH

Emir Halabi, Mustafa Baylan
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This research uses the Gravity Model to study trade between Türkiye and the MENA region from 2000 to 2023. The main goal is to understand how key factors shape bilateral trade volumes. These factors include per capita GDP, geographical distance, population size, free trade agreements, and shared borders. The study also tests whether the Gravity Model provides a statistically robust explanation for these trade patterns. By identifying what helps or hinders trade, the research aims to inform policy. The objective is to strengthen conditions that support trade and to reduce existing barriers. The study also tests the empirical validity of the Gravity Model. While this framework is widely used in trade literature, this study examines its relevance specifically for Türkiye and its MENA partners. The analysis follows a dual-method structure. The theoretical part uses a descriptive-analytical approach. The empirical part applies quantitative econometric techniques. Bilateral trade patterns are examined using a panel data specification. The data show signs of heteroskedasticity, serial correlation, and cross-sectional dependence. To address these issues, the estimation strategy primarily employs a Fixed Effects specification with Driscoll–Kraay robust standard errors as the baseline model. For time-invariant variables, a supplementary Random Effects specification is applied, with inference adjusted via Arellano's group-clustered correction. All analyses were performed using R software. The results suggest that trade patterns between Türkiye and MENA countries align with Gravity Model predictions. Trade volumes tend to rise when per capita income and population increase. This implies that larger and more affluent markets engage in more trade. Countries with free trade agreements in place experience a notable boost in bilateral trade. Drawing on the supplementary estimates, geographical distance, which raises transport and logistics costs, is tentatively associated with reduced trade flows. Similarly, the supplementary model suggests that the benefit of sharing a border may be relatively small.

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