HANDLING INTERREGIONAL TRANSPORT AND TRANSACTION COSTS TROUGH BRIDGES AND ENHANCING ECONOMIC GROWTH AND DEVELOPMENT

Year 2017, Volume: 5 Issue: 2, 1 - 29, 06.10.2017

Mehmet Küçükmehmetoğlu

https://doi.org/10.18825/iremjournal.327320

Abstract

The
most important impediment to interregional trade is the transportation and transaction
cost among trading parties. In this study, the transportation and transaction
cost is characterized in three different forms of gaps between trading partners
viz; physical, institutional, and social. In all forms of gaps, movement can be
facilitated by a form of bridge. Bridges, as an abstract concept, can be
characterized as i) physical bridges connecting two sides of any geographic obstacles,
ii) institutional bridges handling transaction limitations (such as absence of
compatible telecommunication, banking, legal system), and iii) socio-cultural
bridges dealing with difficulties for mutual understanding of trading parties
such as cultural mismatches. Physical
bridges are the basic capital investments linking physical gaps between
sides such as tunnels, bridges, highways, airports. Institutional bridges are the compatible institutional structures
among regions, states, countries such as banking, insurance finance, and legal
structures. Socio-cultural bridges
are the socio-cultural proximities among societies such as historic
backgrounds, common languages, familiar religious practices, common cultural
identities from food to humor. In this study, first, the benefits of bridges are theoretically presented, and then the
advantages of various forms of bridges to the selected country, Turkey, are
critically presented. The study has shown that, Turkey has been handling all forms of transportation and
transaction costs not only through the physical bridges but also through
the legal, institutional as well as the informal and emotional bridges. In this
process, Turkey is taking advantage of her geostrategic and geopolitical
location as well as her geo-cultural characteristics which have been accumulated
throughout history. As a result, all efforts aimed to reduce the cost of transportation
and transaction bring about additional consumer and producer surpluses and
which consequently bring about positive welfare gain to the Turkish society. 

Keywords

Bridges, spatial price equilibrium model, transport cost, transaction cost, consumer surplus, local and international trade, growth and development, hinterland, export based growth.

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