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Original Article

Ekonomik Yaklasim. 2008; 19(Special): 1-16


EFFECTS OF CUSTOM UNION ON TURKEY’S SOCIAL WELFARE

İsmail BULMUŞ.




Abstract
Cited by 1 Articles

In this article, the social welfare effects of the customs union between Turkey and the European Union on Turkish economy have been studied by utilizing the partial equilibrium analysis.As the first step, the degree of sensitivity of Turkey’s imports to price changes has been estimated. The regression analysis results showed that Turkey’s imports has a demand-price elasticity of about (-0,56) for the period 1996-2003. This elasticity coefficient has been used to compute the increase in Turkey’s imports due to customs union. The numerical results of the study point out an increase of about 30 billion dollars in consumer surplus for 2006, which is equivalent to 7.33% of GNP. This number does of course not take into account welfare loss faced by producers and government. When taken into consideration, social welfare increase falls to 0.88% of GNP, which is a relatively moderate rate. However, it would have been 1,75 times larger if Turkish currency would not have overappreciated in past few years. It can be concluded that although not as much as expected, custom union had some positive effects on Turkish economy, particularly in increasing social welfare.

Key words: Customs Union, European Union, social welfare effects, Turkey

Article Language: EnglishTurkish






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