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Abstract
Purpose ― The main objective of this study is to explore the relationship between bilateral official development assistance and the export of Turkey to 18 Turkish aid recipient countries between 1998 and 2019.
Methods ― The study employs the gravity model of international trade to capture the effect of official development assistance on Turkish export to its aid recipient countries and utilizes Panel data econometric analysis.
Findings ― The official development assistance (ODA) remains statistically significant across the models, indicating that ODA is one of the significant drivers of Turkish bilateral trade with the aid recipient countries.
Implications ― The study argues that Turkey applied ODA as a foreign policy tool to access new markets in the Middle East, Balkans, Africa, and Asia. Turkish exports to developing countries increased due to the upsurged country's foreign aid donation to its recipients.
Originality ― This study deviates from other studies in the literature by empirically examining the relationship between bilateral Official development assistance and the export of Turkey.
Keywords
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References
- Akpınar, P. (2013). Turkey’s peacebuilding in Somalia: The limits of humanitarian diplomacy. Turkish Studies, 14(4), 735–757. https://doi.org/10.1080/14683849.2013.863448
- Alesina, A., & Dollar, D. (2000). Who gives foreign aid to whom and why? Journal of Economic Growth, 5(1), 33–63. https://doi.org/10.1023/A:1009874203400
- Apodaca, C. (2017). Foreign aid as foreign policy tool. Oxford University Press. https://doi.org/10.1093/acrefore/9780190228637.013.332
- Arvin, B. M., & Baum, C. (1997). Tied and untied foreign aid: A theoretical and empirical analysis. Keio Economic Studies, 34(2), 71–79.
- Baird, T. (2016). The geopolitics of Turkey’s ‘humanitarian diplomacy’ in Somalia: A critique. Review of African Political Economy, 43(149), 470–477. https://doi.org/10.1080/03056244.2015.1084913
- Brada, J. C., & Méndez, J. A. (1985). Economic integration among developed, developing and centrally planned economies: A comparative analysis. The Review of Economics and Statistics, 67(4), 549–556. https://doi.org/10.2307/1924798
- Breusch, T. S., & Pagan, A. R. (1980). The Lagrange multiplier test and its applications to model specification in econometrics. The Review of Economic Studies, 47(1), 239–253. https://doi.org/10.2307/2297111
- Çevik, S. B. (2014). Turkey’s state-based foreign aid: Narrating “Turkey’s story.” Rising Powers Quarterly, 1(2), 55–67.
- Çevik, Senem B. (2018). Narrating Turkey’s story: Communicating its nation brand through public diplomacy. In E. Parlar Dal (Ed.) (pp. 213–230). Cham: Springer International Publishing. https://doi.org/10.1007/978-3-319-72365-5_10
- Davutoğlu, A. (2013). Turkey’s humanitarian diplomacy: Objectives, challenges and prospects. Nationalities Papers, 41(6), 865–870. https://doi.org/10.1080/00905992.2013.857299
- Endo, K., & Murashkin, N. (2022). Japan’s infrastructure export and development cooperation: The role of ODA loan projects in the 2010s. Australian Journal of International Affairs, 0(0), 1–21. https://doi.org/10.1080/10357718.2022.2064972
- Gulrajani, N., & Calleja, R. (2019). Understanding donor motivations: Developing the principled aid index. Overseas Development Institute. Retrieved from https://apo.org.au/node/227586
- Güngör, B. (2021). Foreign aid during the COVID-19 pandemic: evidence from Turkey. Southeast European and Black Sea Studies, 21(3), 337–352. https://doi.org/10.1080/14683857.2021.1900668
- Inançli, S., & Mahamat Addi, H. (2019). Trade creation and trade diversion effects in the economic community of Central African States. African Development Review, 31(3), 307–317. https://doi.org/10.1111/1467-8268.12391
- Kavakli, K. C. (2018). Domestic politics and the motives of emerging donors: Evidence from Turkish foreign aid. Political Research Quarterly, 71(3), 614–627. https://doi.org/10.1177/1065912917750783
- Korkmaz, A., & Zengin, H. (2020). The political economy of Turkish foreign aid. In E. Parlar Dal (Ed.), Turkey’s political economy in the 21st century (pp. 133–161). Cham: Springer International Publishing. https://doi.org/10.1007/978-3-030-27632-4_6
- Lo Turco, A., & Maggioni, D. (2018). Effects of Islamic religiosity on bilateral trust in trade: The case of Turkish exports. Journal of Comparative Economics, 46(4), 947–965. https://doi.org/10.1016/j.jce.2018.02.001
- Martinez-Zarzoso, I. (2019). Effects of foreign aid on income through international trade. Politics and Governance, 7(2), 29–52. https://doi.org/10.17645/pag.v7i2.1830
- Martínez-Zarzoso, I., Nowak-Lehmann D., F., & Klasen, S. (2010). The economic benefits of giving aid in terms of donors exports. In Proceedings of the German Development Economics Conference, Hannover 2010. Göttingen: Verein für Socialpolitik, Ausschuss für Entwicklungsländer. Retrieved from http://hdl.handle.net/10419/39976
- Martínez-Zarzoso, I., Nowak-Lehmann D., F., Klasen, S., & Johannsen, F. (2016). Does German development aid boost German exports and German employment? A sectoral level analysis. Jahrbücher Für Nationalökonomie Und Statistik, 236(1), 71–94. https://doi.org/10.1515/jbnst-2015-1003
- Martínez-Zarzoso, I., Nowak-Lehmann D., F., Parra, M. D., & Klasen, S. (2014). Does aid promote donor exports? Commercial interest versus instrumental philanthropy. Kyklos, 67(4), 559–587. https://doi.org/10.1111/kykl.12068
- Martínez-Zarzoso, Inma, Nowak-Lehmann, F. D., & Klasen, S. (2017). Aid and its impact on the donor’s export industry: The dutch case. The European Journal of Development Research, 29(4), 769–786. https://doi.org/10.1057/s41287-016-0060-5
- Mehmetcik, H., & Pekel, S. (2020). The determinants of Turkish foreign aid: An empirical analysis. In E. Parlar Dal (Ed.), Turkey’s political economy in the 21st century (pp. 195–213). Cham: Springer International Publishing. https://doi.org/10.1007/978-3-030-27632-4_8
- Nasre Esfahani, M., & Rasoulinezhad, E. (2017). Iran’s trade policy of Asianization and de-Europeanization under sanctions. Journal of Economic Studies, 44(4), 552–567. https://doi.org/10.1108/JES-05-2016-0101
- Nilsson, J. (1998). The emergence of new organizational models for agricultural cooperatives. Swedish Journal of Agricultural Research, 28(1), 39–47.
- Noh, B., & Heshmati, A. (2017). Does official development assistance affect donor’s export? Case of Korea (IZA Discussion Paper No. 10553). https://doi.org/10.2139/ssrn.2923636
- Nowak-Lehmann D., F., Martínez-Zarzoso, I., Herzer, D., Klasen, S., & Cardozo, A. (2013). Does foreign aid promote recipient exports to donor countries? Review of World Economics, 149(3), 505–535. https://doi.org/10.1007/s10290-013-0155-4
- Nowak-Lehmann D., Felicitas, Martínez-Zarzoso, I., Klasen, S., & Herzer, D. (2009). Aid and trade – A donor’s perspective. The Journal of Development Studies, 45(7), 1184–1202. https://doi.org/10.1080/00220380902952407
- Otor, S. A., & Dornan, M. (2017). How does foreign aid impact Australian exports in the long-run? (SSRN Scholarly Paper No. 3044133). https://doi.org/10.2139/ssrn.3044133
- Pesaran, M. H. (2004). General diagnostic tests for cross section dependence in panels (Cambridge Working Papers No. 0435).
- Pesaran, M. H. (2007). A simple panel unit root test in the presence of cross‐section dependence. Journal of Applied Econometrics, 22(2), 265–312. https://doi.org/10.1002/jae.951
- Pesaran, M Hashem. (2021). General diagnostic tests for cross-sectional dependence in panels. Empirical Economics, 60(1), 13–50. https://doi.org/10.1007/s00181-020-01875-7
- Pöyhönen, P. (1963). A tentative model for the volume of trade between countries. Weltwirtschaftliches Archiv, 90, 93–100.
- Skärvall, L. (2012). Does Swedish aid help or hinder bilateral trade: An empirical study on the effect of official development assistance and aid for trade. Uppsala University. Retrieved from http://urn.kb.se/resolve?urn=urn:nbn:se:uu:diva-168242
- Tinbergen, J. (1962). Shaping the world economy: Suggestions for an international economic policy. New York: The Twentieth Century Fund.
- Zarin-Nejadan, M., Monteiro, J.-A., & Noormamode, S. (2008). The impact of official development assistance on donor country exports: Some empirical evidence for Switzerland. University of Neuchâtel. Retrieved from https://www.unine.ch/files/live/sites/irene/files/shared/documents/Publications/Rapports/MZ-rapport-DDC-2008.pdf
References
Akpınar, P. (2013). Turkey’s peacebuilding in Somalia: The limits of humanitarian diplomacy. Turkish Studies, 14(4), 735–757. https://doi.org/10.1080/14683849.2013.863448
Alesina, A., & Dollar, D. (2000). Who gives foreign aid to whom and why? Journal of Economic Growth, 5(1), 33–63. https://doi.org/10.1023/A:1009874203400
Apodaca, C. (2017). Foreign aid as foreign policy tool. Oxford University Press. https://doi.org/10.1093/acrefore/9780190228637.013.332
Arvin, B. M., & Baum, C. (1997). Tied and untied foreign aid: A theoretical and empirical analysis. Keio Economic Studies, 34(2), 71–79.
Baird, T. (2016). The geopolitics of Turkey’s ‘humanitarian diplomacy’ in Somalia: A critique. Review of African Political Economy, 43(149), 470–477. https://doi.org/10.1080/03056244.2015.1084913
Brada, J. C., & Méndez, J. A. (1985). Economic integration among developed, developing and centrally planned economies: A comparative analysis. The Review of Economics and Statistics, 67(4), 549–556. https://doi.org/10.2307/1924798
Breusch, T. S., & Pagan, A. R. (1980). The Lagrange multiplier test and its applications to model specification in econometrics. The Review of Economic Studies, 47(1), 239–253. https://doi.org/10.2307/2297111
Çevik, S. B. (2014). Turkey’s state-based foreign aid: Narrating “Turkey’s story.” Rising Powers Quarterly, 1(2), 55–67.
Çevik, Senem B. (2018). Narrating Turkey’s story: Communicating its nation brand through public diplomacy. In E. Parlar Dal (Ed.) (pp. 213–230). Cham: Springer International Publishing. https://doi.org/10.1007/978-3-319-72365-5_10
Davutoğlu, A. (2013). Turkey’s humanitarian diplomacy: Objectives, challenges and prospects. Nationalities Papers, 41(6), 865–870. https://doi.org/10.1080/00905992.2013.857299
Endo, K., & Murashkin, N. (2022). Japan’s infrastructure export and development cooperation: The role of ODA loan projects in the 2010s. Australian Journal of International Affairs, 0(0), 1–21. https://doi.org/10.1080/10357718.2022.2064972
Gulrajani, N., & Calleja, R. (2019). Understanding donor motivations: Developing the principled aid index. Overseas Development Institute. Retrieved from https://apo.org.au/node/227586
Güngör, B. (2021). Foreign aid during the COVID-19 pandemic: evidence from Turkey. Southeast European and Black Sea Studies, 21(3), 337–352. https://doi.org/10.1080/14683857.2021.1900668
Inançli, S., & Mahamat Addi, H. (2019). Trade creation and trade diversion effects in the economic community of Central African States. African Development Review, 31(3), 307–317. https://doi.org/10.1111/1467-8268.12391
Kavakli, K. C. (2018). Domestic politics and the motives of emerging donors: Evidence from Turkish foreign aid. Political Research Quarterly, 71(3), 614–627. https://doi.org/10.1177/1065912917750783
Korkmaz, A., & Zengin, H. (2020). The political economy of Turkish foreign aid. In E. Parlar Dal (Ed.), Turkey’s political economy in the 21st century (pp. 133–161). Cham: Springer International Publishing. https://doi.org/10.1007/978-3-030-27632-4_6
Lo Turco, A., & Maggioni, D. (2018). Effects of Islamic religiosity on bilateral trust in trade: The case of Turkish exports. Journal of Comparative Economics, 46(4), 947–965. https://doi.org/10.1016/j.jce.2018.02.001
Martinez-Zarzoso, I. (2019). Effects of foreign aid on income through international trade. Politics and Governance, 7(2), 29–52. https://doi.org/10.17645/pag.v7i2.1830
Martínez-Zarzoso, I., Nowak-Lehmann D., F., & Klasen, S. (2010). The economic benefits of giving aid in terms of donors exports. In Proceedings of the German Development Economics Conference, Hannover 2010. Göttingen: Verein für Socialpolitik, Ausschuss für Entwicklungsländer. Retrieved from http://hdl.handle.net/10419/39976
Martínez-Zarzoso, I., Nowak-Lehmann D., F., Klasen, S., & Johannsen, F. (2016). Does German development aid boost German exports and German employment? A sectoral level analysis. Jahrbücher Für Nationalökonomie Und Statistik, 236(1), 71–94. https://doi.org/10.1515/jbnst-2015-1003
Martínez-Zarzoso, I., Nowak-Lehmann D., F., Parra, M. D., & Klasen, S. (2014). Does aid promote donor exports? Commercial interest versus instrumental philanthropy. Kyklos, 67(4), 559–587. https://doi.org/10.1111/kykl.12068
Martínez-Zarzoso, Inma, Nowak-Lehmann, F. D., & Klasen, S. (2017). Aid and its impact on the donor’s export industry: The dutch case. The European Journal of Development Research, 29(4), 769–786. https://doi.org/10.1057/s41287-016-0060-5
Mehmetcik, H., & Pekel, S. (2020). The determinants of Turkish foreign aid: An empirical analysis. In E. Parlar Dal (Ed.), Turkey’s political economy in the 21st century (pp. 195–213). Cham: Springer International Publishing. https://doi.org/10.1007/978-3-030-27632-4_8
Nasre Esfahani, M., & Rasoulinezhad, E. (2017). Iran’s trade policy of Asianization and de-Europeanization under sanctions. Journal of Economic Studies, 44(4), 552–567. https://doi.org/10.1108/JES-05-2016-0101
Nilsson, J. (1998). The emergence of new organizational models for agricultural cooperatives. Swedish Journal of Agricultural Research, 28(1), 39–47.
Noh, B., & Heshmati, A. (2017). Does official development assistance affect donor’s export? Case of Korea (IZA Discussion Paper No. 10553). https://doi.org/10.2139/ssrn.2923636
Nowak-Lehmann D., F., Martínez-Zarzoso, I., Herzer, D., Klasen, S., & Cardozo, A. (2013). Does foreign aid promote recipient exports to donor countries? Review of World Economics, 149(3), 505–535. https://doi.org/10.1007/s10290-013-0155-4
Nowak-Lehmann D., Felicitas, Martínez-Zarzoso, I., Klasen, S., & Herzer, D. (2009). Aid and trade – A donor’s perspective. The Journal of Development Studies, 45(7), 1184–1202. https://doi.org/10.1080/00220380902952407
Otor, S. A., & Dornan, M. (2017). How does foreign aid impact Australian exports in the long-run? (SSRN Scholarly Paper No. 3044133). https://doi.org/10.2139/ssrn.3044133
Pesaran, M. H. (2004). General diagnostic tests for cross section dependence in panels (Cambridge Working Papers No. 0435).
Pesaran, M. H. (2007). A simple panel unit root test in the presence of cross‐section dependence. Journal of Applied Econometrics, 22(2), 265–312. https://doi.org/10.1002/jae.951
Pesaran, M Hashem. (2021). General diagnostic tests for cross-sectional dependence in panels. Empirical Economics, 60(1), 13–50. https://doi.org/10.1007/s00181-020-01875-7
Pöyhönen, P. (1963). A tentative model for the volume of trade between countries. Weltwirtschaftliches Archiv, 90, 93–100.
Skärvall, L. (2012). Does Swedish aid help or hinder bilateral trade: An empirical study on the effect of official development assistance and aid for trade. Uppsala University. Retrieved from http://urn.kb.se/resolve?urn=urn:nbn:se:uu:diva-168242
Tinbergen, J. (1962). Shaping the world economy: Suggestions for an international economic policy. New York: The Twentieth Century Fund.
Zarin-Nejadan, M., Monteiro, J.-A., & Noormamode, S. (2008). The impact of official development assistance on donor country exports: Some empirical evidence for Switzerland. University of Neuchâtel. Retrieved from https://www.unine.ch/files/live/sites/irene/files/shared/documents/Publications/Rapports/MZ-rapport-DDC-2008.pdf