A Gravity Model Analysis of Forest Products Trade Between Turkey and European Union Countries

Abstract

The study aimed to understand the determining factors of the trade between Turkey and the European Union (EU) countries in the forest products sector and assess Turkey’s forest product export potential to the EU. The study period was from 2005 to 2020 and focused on HS44, HS47, and HS48 forest product groups. A gravity model was estimated using panel data with the Ordinary Least Squares, Random Effects, and Hausman-Taylor estimation methods. Results indicate that the forest products exports from Turkey to the EU are significantly influenced by the Gross Domestic Product, the population of Turkey and the EU partner, and negatively by the relative forest endowment. The elasticities estimated were then used to predict the export potential of Turkey in the trade of forest products. The findings revealed that the predicted forest export value exceeded Turkey’s actual forest products export to Denmark, France, Italy, Luxembourg, Poland, Slovenia and Spain from 2005 to 2020.