An Analysis of the Dynamic Panel Gravity Model: The Effect of Immigration Flows from Turkey to OECD Countries on Foreign Trade

Year 2021, Volume: 11 Issue: 4, 93 - 111, 16.12.2021

Hande Aksöz Yılmaz , Ahmet İncekara

Abstract

This study analyzes how bilateral trade between Turkey and Organisation for Economic Co-operation and Development (OECD) countries has been affected by the immigrant flows from Turkey to OECD countries. The main objective is to unveil which channels of foreign trade are affected by immigrant flows from Turkey to OECD countries. Most empirical studies examining the static relationship between international migration and bilateral foreign trade take advantage of panel gravity models. This paper outlines a new approach on using a dynamic panel gravity model to analyze the dynamic relationship between international migration and bilateral foreign trade. This study tests the impact of immigrant flows from Turkey to OECD countries on bilateral foreign trade between countries from 2000-2016 for the first time using the system GMM estimation method. The evidence from this study indicates the relationship between bilateral foreign trade and immigrant flows from Turkey to OECD countries from Turkey to have complementarity. In addition, this study’s findings indicate immigration flows from Turkey to OECD countries to contribute to the exports from immigrants’ host countries and to increase Turkey’s imports. The results show these immigrant flows to be effective by means of networking channels in terms of foreign trade.

Keywords

Uluslararası göç, göçmen akımları, dış ticaret, karşılıklı dış ticaret, dinamik panel gravity modeli.

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