From Spring to Winter? An Analysis of "Arab Spring" Impacts on Turkey and Mena Region Foreign Trade with Gravity Approach

Abstract

This paper analyzed the foreign policy adjustment in Turkey's current ruling party government period, and the impacts of Arab Spring on the Turkey-MENA region trade. For this purpose, Tinbergen's Gravity Model that is regarded as the workhorse of the empirical international trade model was run by augmenting it with foreign policy adjustment dummies (political shift and Arab Spring), political violence, corruption, free trade agreements, regional and trade agreements. With these policy dummies, we analyzed the impacts of Turkish foreign policy adjustment tools on Turkey and MENA region trade. Estimation results showed that the increase in political connections and concentration in the MENA region had positive impacts on Turkey and MENA regional trade. In contrast to this, the post-Arab Spring period had negative impacts on trade. Empirical results showed that soft power tools for policy activism such as visa liberalization programs, free trade agreements, preferential trade agreements, highlevel economic corporation councils had positive impacts on bilateral trade. But coercive policies and being part of regional conflict had negative impacts on bilateral trade. Contribution/ Originality: This paper contributes to the existing literature by analyzing the Arab Spring impacts on bilateral trade and investigating the economic background of Turkey's foreign policy changes. In addition to this, paper underlines the information advantage of neighboring countries in an unstable region. 1 See for details Oktav (2011).