© 1993 International Bank for Reconstruction and Development / The World Bank
research-article |
Trade Reform in the Partially Liberalized Economy of Turkey
Glenn W. Harrison is in the Department of Economics, College of Business Administration, at the University of South Carolina; Thomas F. Rutherford is in the Department of Economics at the University of Colorado at Boulder; and David G. Tarr is in the Policy and Research Department in the World Bank. This study is part of the World Bank's research on "The Impact of EC 1992 and Trade Integration in Selected Mediterranean Countries", supported under grant RPO 67564. The authors would like to thank Deborah Bateman, Marylou Uy, Omer Karasapan, and Michael Klein for data and helpful comments and two referees for their suggestions.
Recent reforms in trade policy in Turkey have produced a foreign trade regime that exhibits very little antiexport bias on average. A quantitative, multisectoral general equilibrium model of the Turkish economy shows that piecemeal trade policy reform, based on first-best rationales that are appropriate for highly distorted economies, would not now be appropriate. Further tariff reductions must be coordinated with export subsidy reductions to attain significant welfare benefits. The dispersion of distortions, especially export subsidies, is more important than their level. A policy of harmonizing tariffs to the common external tariff of the European Community has virtually no effect on welfare.