The Effects of Developments in Logistics Performance on Internatıonal Trade: EU-TR Example

Abstract

International trade drives from eliminating the excess supply and demand of goods and services all over the World, as each country does not have the ability with its own economic resources. A country attracts the inflow of foreign income by selling these excess goods and services and outflows the foreing income by buying on the behalf of domestic consumers’ welfare. In this context, countries have developed political and economic initiatives to facilitate and regulate international trade and also to follow profitable pathway for competative international market. Economic integrations such as the European Union are at the forefront of such competition. However, although such initiatives may maintain certain gain, it is of great importance to carry out logistics activities efficiently to provide previligies into trade comptetions.

Properly planned and performed the sound logistics activities have the potential to boost the efficiency of both import and export activities while reducing waste of resources. In this study, the impacts of the logistics index on the exports performance of Turkey into the EU is analyzed empricially based on the traditional Gravity model. This basic trade model has been an empirical popular in that it paves the way to measure accurutely the trade flows between countries for many products, but recently some authors have found reverse evidence that there have been opposition views raised for the gravity equation.

In context of these discussions, this paper retest this model integrating the effects of Logistic index covering the years between 2007 and 2022 with the panel data of the PPML estimation model. We also introduce economic size as the Proxy of Linder effect confirming a positive impact of bilateral trade. These evidences of the emprical estimations show that the gravity model can explain the pattern of Türkiye with European Union. At the same time, it is seen that the level of logistics performance plays an important role in the effect of exports on economic growth; Therefore, it is found that export growth depends on the level of logistics performance.