Trade Benefits of Transport Network Expansion Policy in Türkiye

Abstract

Over the past two decades, Türkiye has undertaken considerable investment in transport infrastructure to build a well-developed transport network and to get integrated into global supply chains. This study aims to evaluate long-term trade expansion benefits of transport network investment in Türkiye to derive recommendations for transport and industrial policy. For this purpose, gravity models of trade are estimated for exports and imports with infrastructure investments in various transport modes as the main explanatory variables; as well as other independent variables involving determinants of bilateral trade flow, Information and Communication Technology (ICT) development. In addition, control variables for Türkiye and for partner countries are involved in the models to obtain robust results. A main inference from the analysis entails that transport infrastructure investment acts as a driver for import growth rather than export expansion. As another important conclusion, transport infrastructure investment should be carried out with all transport types considered, based on a long-term transport policy scheme with special attention on road and rail infrastructure. Moreover, transport modes should be integrated to enhance network and connectivity of the overall logistics system. As a final remark, a widespread practice of multimodal and intermodal transportation can be achieved by a holistic integration policy of transport modes.