FREE TRADE AGREEMENT AND MARGINAL INTRA INDUSTRY
TRADE: THE CASE OF TURKEY AND ISRAEL Sevilay Kucuksakarya, Anadolu University, Department of Economics
Eskisehir, Turkey, email: [email protected]
Abstract
Recent developments in intra industry trade (IIT) literature center on the relationships between IIT and adjustment
costs which vary with changes in trade pattern. This study investigates the marginal intra industry trade (MIIT)
between Turkey and Israel at the SITC 3 digit level, over the period of 1990 and 2012. It also tries to reveal the effect
of Free Trade Agreement (FTA) between two countries on the changes of MIIT over time by using Brülhart’s (1994)
A, B, C and Menon and Dixon’s (1997) UMCIT indices and to put out the adjustment costs in the manufacturing
industry in Turkey. The results show that, FTA has little impact on the MIIT structure of trade.
Keywords: Free Trade Agreement, Marginal Intra Industry Trade
Introduction
FTA negotiations between Turkey and Israel
began in 1992 and concluded on 14 March
1996, then was signed in Tel-Aviv and
entered into force on 1 May 1997.
Considering the FTAs which Israel has
signed with U.S., EU and EFTA, Turkey not
only has gained the access to Israel’s market
but also has obtained entry into these other
markets with this Agreement. By the FTA
signed between the two countries, new
customs duties or charges having equivalent
effect on imports will not be placed and is
currently being implemented will not be
increased on foreign trade, after the entry
into force of the Agreement.
To interpret the impact of Agreement's on
foreign trade exchange, we need to compare
the dates which the signed of FTA's entry
into force in 1997 and 1996 between Turkey
and Israel. Data comparison shows that
imports raised by 21%, exports increased by
54% and volume of trade rose by 40%. In
the year after the agreement imports, exports
and volume of trade increased by 21%, 21%
and 22% respectively. At the end of the third
year of the agreement, imports rose by 5% in
addition to exports and volume of trade
which increased by 22% and 16%.. When
looking at the trade figures of the year 2010,
the increase can be seen in imports of 27%,
in exports of 36% and in the volume of trade
32%, between the two countries.
The trade volume between the two countries
is maintaining a steadily increase from the
date the Agreement enters into force by until
today. For the first time in 2010 surpassed $
2 billion and reached $ 3.5 billion from 1.3
billion dollars in 2001. As in 2011, 15 % of
exports boosted and imports increased by
51% which exceeded 2 billion dollars. On
the contrary of this, in 2012, the location of
this rise felt. Due to 3% rate of decrease in
exports and 43% rate of increase in imports,
volume of trade between the two countries
declined over 1 billion dollars in foreign
trade.
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Graph1. Foreign Trade between Turkey and Israel
Resource: Rebuplic of Turkey Ministiry of Economy
The primarily exports commodities from
Turkey to Israel are iron and steel,
automotive, petroleum and petroleum goods,
electrical machinery, chemicals, building
materials, clothing and metal goods, while
the plastics, chemicals and agricultural
goods are Israel’s exports to Turkey as
goods. (www.economy.gov.tr)
The main items of Turkey and Israel
economic relations are bilateral trade,
defense industry projects, contracting
services, tourism and mutual investments.
The two countries have complementary
economic structure; therefore current
increases the potential for foreign trade.
Despite large increases in recent years of the
volume of trade between the two countries, it
lags behind because of that potential still
cannot be used literally today. In 2010,
Turkey ranks as third among countries where
it operates by Israel’s businessmen after U.S.
and Britain (www.mfa.gov.tr).
In the world economy Turkey and Israel are
the two fastest regional economies which
survived the global economic crisis. Both
countries have reached a natural commercial
rate as a result of the continuing effects of
the crisis in EU and U.S which are also the
largest trading partners of them. The volume
of trade between Turkey and Israel has
exceeded 3.4 billion in 2008, 4.4 billion
dollars in 2011 and 4 billion dollars again in
2012.
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In literature it is confirmed that there is a
secular increase in the share of intra-industry
flows in trade among developing countries’
economies as well as developed ones by the
studies of Grubel and Lloyd (1975),
Greenaway and Milner (1986), Greenaway
and Hine (1991) and OECD (1994)
(Brülhart, 2002). Recent developments in
intra-industry trade (IIT) especially revolve
around the relationships between adjustment
costs related with trade pattern’s change and
IIT. In global economy, it is reasonable to
assume that trade liberalization among open
economies should have an effect on trade
pattern and so on IIT.
In this study, it is aimed to analyze the
marginal IIT which is a dynamic measure of
IIT between Turkey and Israel over the
period from 1990 to 2012 which comprises
Turkey’s liberalization with Israel by FTA.
The rest of study is set as follows; Section 2
gives a short literature review related to
marginal IIT. Then Section 3 provides basic
information on measurements of MIIT and
Section 4 discusses the results. Next, Section
5 as the concluding section of study presents
a brief summary of findings.
Literature Review
IIT concept emerged in the late 1960s and
has a major impact in the creation of in both
theoretical and empirical analysis of
international trade and foreign trade policy
(Brülhart, 1994: 602; Grubel, 1967: 375).
Towards the end of 1970 the concept of IIT
has attempted to explain through theoretical
models (Torstensson, 1999: 14). According
to Grubel and Lloyd (1971, 1975), the
concept of IIT is value of export which
coincides with value of the exactly the same
industry's imports’ in a certain level of
aggregation (Grubel and Lloyd, 1971: 249,
1975: 20).
Caves (1981) couldn’t find any significant
relationship between IIT and trade
liberalization by testing natural and artificial
barriers (i.e. non-trade barriers -NTB’s ) to
IIT in his study, whereas Balassa and
Bauwens (1987) find strong empirical
support for a positive correlation between
them. They found that trade liberalization
due to customs unions stimulates IIT. In
contrary, Hamilton and Kniest (1991)
reached the result that there is no support
for the encouragement of trade
liberalization to IIT.
Studies on whether Turkey’s trade structure
is inter-industry or IIT are not still enough in
IIT literature. Havrylyshn and Civan (1985)
tried to measure and determine the direction
of changes in the structure of IIT in their
study. They calculated the share of Turkey's
IIT in 1978 as 7.9% (Havrylyshn and Civan,
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1985: 260-261). The first crucial study
which measured IIT for selected years of the
1973 and 1991 period by comparative
analysis between other countries and Turkey
belongs to Schüler (1995). The author
calculated the share of IIT between Spain
and Turkey emerged in trade for the related
period as 50% and 20% respectively.
More recently Lohrmann (2002) both
measured vertical and horizontal IIT and
also examined how trade liberalization
affects on employment changes in
Hungarian food industry between the years
1992 and 2002. Kosekahyaoglu (2002) and
Simsek (2008) reached important empirical
results in their researches by analyzing the
structure of IIT of Turkey based on both
static and dynamic indices. Kosekahyaoglu
implied in his study that the values of share
of Turkey’s IIT received the highest among
countries such as Greece, Spain and
Portugal. Also, according to author’s
findings, structural adjustment costs are low
in these countries.
Grubel and Lloyd’s indices carry static
property and are insufficient to show the
change in time. Although, changes over time
can be observed by calculating index for
separately different periods, it is not possible
to analyze trade flows and the reasons of
changes in specialization by this period
comparison method (Murshed, 2001:103).
Dynamic measures of IIT may be more
informative than static measures to analyze
these situations. Thus, as the marginal intra-
industry trade (MIIT) measured Grubel-
Lloyd indices should not be used (Brülhart,
1994:602). MIIT indices are used to
calculate that how much part of the value of
changes in total trade is realized as IIT; in
other words, it measures the degree of IIT in
trade.
Data and Methodology
The main source of the data is the United
Nations COMTRADE database. SITC 3
digit classified import and export data
measured in $US for the period of 1990 and
2012. Brülhart (1994) suggests three kind of
measures in the idea of Grubel and Lloyd
(1971). Brülhart’s A index is, in fact, a direct
generalization of the Grubel Lloyd index. It
is expressed as:
1
t t n t t n
t t n t t n
X X M MMIIT A
X X M M
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This index can also be briefly expressed as
follows:
1X M
AX M
where Xt and Mt have the meaning of
exports and imports of a particular industry,
while n is the number of years, and ∆ shows the
change in trade flows between two years.
The A index takes values between 0 and 1
like Grubel-Lloyd Index. Taking the value of
index 0 means that MIIT in a particular
industry carries entirely feature as inter-
industry trade, and the value of 1 reveals
MIIT has the distinction of trade which
indicates completely IIT feature (Brülhart and
Elliott, 1998: 232).
The A index gives available results for
multi-country studies, however, it provides
quite limited feature for single-country
studies, because of not containing any
information about the distribution of losses
and gains among countries or sectors, caused
by trade. For this reason Brülhart B index
was developed. The B index is useful to
examine issues related to sectorial trade
performance as it offers information on the
distribution of trade induced gains and losses
among sectors or countries (Brülhart and
Hine, 1999).
Index is expressed as follows:
X MB
X M
where 1B A .
The index takes values between -1 and 1. B
index includes information about specific
sector performance thus it has two-
dimensional character. Firstly, if B is equal
to 0, then MIIT is entirely of the intra-
industry type, but for values of -1 and 1,
MIIT has completely of the inter industry
type feature. And if B=1, then 0X and
0M . As B= -1 it is opposite (Brülhart,
1994: 606).
In addition to these indeces, Brülhart
proposed an alternative index similar to
GHME index which developed by
Greenaway et al. (1994). This index shows
absolute value of MIIT's conflicting changes
in trade flows. And it is formulated as
follows:
C X M X M
To compare the size of only trade flows
between different countries and industries, A
index will be the most significant tool
(Brülhart, 1994: 609). According to Erlat
and Erlat (2003), it is more appropriate to
measure the size of the required adjustments
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after trade liberalization by C index.
However if X and M take different signs
then C index will be equal to zero and it will
not enable to get information related to the
size of adjustment between intra-industries
(Erlat and Erlat, 2003: 8).
Hamilton and Kniest (1991), Greenaway et
al. (1994) and Brülhart (1994) asserted
adjustment costs which associated with trade
liberalization will depend on the
measurement of IIT. Adjustment costs will
be higher if trade expansion is mainly due to
the variety of IIT, and will be lower if it is
based on the expansion of inter-industry
trade.
According to Menon and Dixon (1997), the
problem of C index occurred from the lack
of amount of trade exchange which is
required to inter-industry factor movements.
Menon and Dixon (1997) proposed a new
index that eliminates this problem and also
measures the changes which are not matched
in trade by following index (Menon and
Dixon, 1997:166 ):
UMCIT X M
Here UMCIT shows inter-industry trade.
The difference between the C and UMCIT
indices is that C index shows absolute size of
MIIT whereas UMCIT shows the absolute
size of marginal inter-industry trade. Unlike
the index C, UMCIT can be scaled by
weighted and can be aggregated (Menon and
Dixon, 1997:166).
Empirical Results
The manufacturing industry has an important
role in Turkey’s exports and imports. After
Turkey’s export-oriented policies and
economic liberalization in the late 1980s,
share of manufacturing industry in total
exports has continuously boosted. Turkey’s
trade pattern with Israel changed after the
assignment of FTA. Tables show analyzes
based on MIIT in manufacturing industry of
Turkey which calculated for three periods in
order to determine the impact of trade
liberalization on adjustment costs and
changes in trade patterns.
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Table 1. MIIT indices between Turkey and Israel with sector of “Chemicals and related products, n.e.s.”
A* B* C* UMCIT A* B* C* UMCIT A* B* C* UMCIT
511 … … … … 0,00 -1,00 311058,00 152018688,00 0,00 -1,00 171484,00 156325024,00
512 … … … … 0,92 -0,08 3250390,00 286539,00 … … … …
513 0,11 -0,89 236442,00 1881396,00 0,19 -0,81 4165560,00 17859844,00 0,19 -0,81 4358064,00 18820064,00
514 0,00 1,00 0,00 1132018,00 0,00 -1,00 0,00 1235659,00 0,00 -1,00 0,00 435583,00
515 … … … … … … … … … … … …
516 … … … … 0,00 1,00 0,00 659410,00 … … … …
522 … … … … 0,00 1,00 0,00 9042256,00 … … … …
523 0,94 -0,06 6045696,00 394450,00 0,00 -1,00 0,00 7257151,00 0,09 -0,91 959698,00 9604485,00
524 … … … … 0,19 -0,81 218800,00 946634,00 … … … …
525 … … … … … … … … … … … …
531 … … … … 0,00 1,00 0,00 1080073,00 … … … …
532 … … … … … … … … … … … …
533 0,48 0,52 737912,00 785371,00 0,47 -0,53 14629118,00 16604041,00 0,52 -0,48 17228864,00 15776496,00
541 … … … … 0,53 -0,47 1125882,00 1003574,00 … … … …
542 0,21 0,79 175510,00 644637,00 0,09 -0,91 3676666,00 36094984,00 0,10 -0,90 4136324,00 36133176,00
551 0,16 -0,84 5304,00 27551,00 0,84 -0,16 412176,00 78530,00 0,68 -0,32 426252,00 201100,00
553 0,13 0,87 1588238,00 10361141,00 0,15 0,85 1789912,00 10281094,00
554 0,00 1,00 0,00 546650,00 0,35 0,65 14086082,00 26317076,00 0,35 0,65 14531326,00 27134160,00
562 … … … … … … … … … … … …
571 … … … … 0,02 -0,98 856552,00 55131672,00 … … … …
572 … … … … … … … … … … … …
573 0,01 -0,99 5744,00 866791,00 … … … … … … … …
574 … … … … 0,08 0,92 609090,00 7377481,00 … … … …
575 0,07 -0,93 834662,00 11536580,00 0,17 -0,83 26196514,00 126525360,00 0,17 -0,83 27151546,00 133144032,00
579 … … … … … … … … … … … …
581 0,00 1,00 0,00 102564,00 0,29 0,71 1833600,00 4382355,00 0,26 0,74 1599738,00 4479017,00
582 0,14 -0,86 301746,00 1896252,00 0,37 0,63 13074784,00 22434334,00 0,51 0,49 20165174,00 19050016,00
583 0,00 1,00 0,00 308618,00
591 0,09 -0,91 178824,00 1721902,00 0,00 1,00 0,00 962077,00 0,57 -0,43 1741100,00 1303725,00
592 … … … … 0,26 -0,74 1845134,00 5341739,00 … … … …
593 … … … … … … … … … … … …
597 … … … … 0,90 0,10 997056,00 106712,00 … … … …
598 0,00 -1,00 0,00 762293,00 0,42 -0,58 7591412,00 10646522,00 0,42 -0,58 8166496,00 11147146,00
Code1990-1995 1996-2012 1990-2012
511 Hydrocarbons and derivatives n.e.s., 512 Alcohols, 513
Carboxylic acids and deriatives, 514 Nitrogen-function
compounds, 515 Organo-inorg., heterocyclic comp., 516
Other organic chemicals, 522 Inorganic chemical elements,
523 Metallic/peroxysalts, of inorg. Acids, 524 Inorg.
chemicals; comp. of prec. Metals, 525 Radio-active
materials, 531 Synth. organic col.matter; colour lakes, 532
Dyeing and tanning extracts etc., 533 Pigments, paints,
varnishes etc.,541 Medicinal and pharm. Products,542
Medicaments, incl. veterinary med.,551Essential oils,
perfume/flavourings, 553 Perfumery, cosmetics/toilet prep.,
554 Soap, cleansing/polishing ma
terials, 562 Fertilizers, other than of 272, 571 Polyethylene,
in primary forms, 572 Polystyrene, in primary forms, 573
PVC etc. in primary forms, 574 Polyacet./-carbon. etc., prim.
Forms, 575 Other plastics, in primary forms, 579 Waste,
scrap etc. of plastics, 581 Tubes, pipes and hoses of plastics,
582 Plates, sheets, etc., of plastics, 583 Monofilament, rods,
etc., of plastics, 591 Disinfectants, pesticides etc., 592
Starches, wheat gluten, glues, 593 Explosives & pyrotechnic
products, 597 Lubricants, anti-freezer etc., 598 Misc.
chemical products n.e.s.
To determine the causes of change in IIT
between Turkey and Israel, Table 1 gives the
calculated MIIT values for the commodities
and products in sector of “Chemicals and
related products, n.e.s”. According to the
results of the calculations for MIIT indices
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between Turkey and Israel, it is seen that the
marginal intra industry is more intense, rather
than MIIT. Industries which have the highest
MIIT values among period of 1996-2012 that
includes the FTA are 512 Alcohols, phenols
etc.; derivatives, and 597 Lubricants, anti-
freezer etc. Referring to the period between
1990 and 2012, 533 Pigments, paints,
varnishes etc 551 Essential oils,
perfume/flavourings, 582 Plates, sheets, etc.,
of plastics, 591 Disinfectants, pesticides etc.
industries have the highest MIIT values. In
the same period it can be seen that in
industries such as 511 Hydrocarbons and
derivatives n.e.s., 514 Nitrogen-function
compounds, 523 Metallic/peroxysalts, of
inorganics 542 Medicaments, incl. veterinary
med., Brülhart A index is equal to 0 and
Brülhart B index takes values close to ±1. As
a result of this condition, structure of trade
occurred in such industries as marginal inter
industry structure and high adjustments costs
have emerged.
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Table 2. MIIT indices between Turkey and Israel with sector of “Manufactured goods classified chiefly by
material”
A* B* C* UMCIT A* B* C* UMCIT A* B* C* UMCIT
611 … … … … … … … … 0,00 1,00 3968,00 1003433,00
612 … … … … … … … … … … … …
613 … … … … … … … … … … … …
621 0,71 -0,29 28002,00 11383,00 0,25 0,75 765204,00 2257636,00 0,28 0,72 847428,00 2132405,00
625 0,00 1,00 0,00 8675901,00 … … … …
629 0,00 1,00 0,00 42417,00 0,26 0,74 569438,00 1624762,00 0,25 0,75 552390,00 1686544,00
633 … … … … … … … … … … … …
634 … … … … … … … … … … … …
635 … … … … … … … … … … … …
641 … … … … 0,81 -0,19 60903688,00 14312768,00 … … … …
642 0,20 0,80 44792,00 184652,00 0,06 0,94 2667248,00 43201208,00 0,06 0,94 2835630,00 43888404,00
651 0,00 1,00 0,00 14181634,00 0,00 -1,00 0,00 20340264,00 0,69 -0,31 15298850,00 6885932,00
652 … … … … 0,00 1,00 0,00 1451263,00
653 0,16 0,84 851998,00 4573049,00 0,98 0,02 12977046,00 324867,00 0,66 0,34 13616418,00 7133892,00
654 … … … … 0,67 0,33 119090,00 58362,00 … … … …
655 … … … … 0,05 0,95 946818,00 16439425,00 … … … …
656 0,00 -1,00 0,00 87156,00 0,00 1,00 0,00 2674861,00 0,01 0,99 19352,00 2651758,00
657 0,00 1,00 0,00 4395868,00 0,91 -0,09 39190224,00 4010044,00 0,94 -0,06 41561672,00 2859904,00
659 … … … … 0,01 0,99 187266,00 30065052,00 … … … …
661 … … … … 0,00 1,00 0,00 48093344,00 … … … …
662 0,05 0,95 89630,00 1594506,00 … … … … 0,00 1,00 0,00 59638332,00
663 0,00 1,00 0,00 319034,00 0,00 1,00 0,00 3867989,00 0,00 1,00 0,00 4539709,00
664 0,99 -0,01 1624680,00 14308,00 0,71 0,29 17859230,00 7122403,00 0,80 0,20 23277728,00 5781098,00
665 0,62 0,38 1251514,00 750971,00 … … … … 0,01 0,99 88220,00 12421367,00
666 … … … … … … … … … … … …
667 … … … … … … … … … … … …
671 … … … … … … … … … … … …
672 … … … … … … … … … … … …
673 … … … … … … … … … … … …
674 … … … … 0,00 1,00 28814,00 21148060,00 … … … …
675 … … … … … … … … … … … …
676 … … … … 0,00 1,00 155100,00 358407456,00 … … … …
677 … … … … … … … … … … … …
678 … … … … … … … … … … … …
679 0,00 1,00 3926,00 1908402,00 0,10 0,90 2483870,00 21369768,00 0,10 0,90 2531384,00 22478666,00
681 … … … … … … … …
682 … … … … 0,06 0,94 1182434,00 19985948,00 … … … …
683 … … … … … … … …
684 … … … … 0,16 0,84 1588380,00 8245994,00 … … … …
685 … … … … … … … …
686 … … … … 0,58 -0,42 16534,00 11907,00 … … … …
687 … … … … … … … … … … … …
689 … … … … … … … … … … … …
691 … … … … 0,08 0,92 623232,00 7201974,00 … … … …
692 0,07 0,93 4910,00 66323,00 0,03 0,97 540700,00 18465712,00 0,03 0,97 563884,00 19073838,00
693 … … … … 0,01 0,99 93412,00 7884693,00 … … … …
694 … … … … 0,22 0,78 938926,00 3344850,00 0,20 0,80 936902,00 3662237,00
695 0,00 1,00 0,00 165654,00 0,09 -0,91 2133312,00 21019092,00 0,10 -0,90 2365038,00 21512700,00
696 0,40 -0,60 24900,00 37404,00 0,19 -0,81 213110,00 918803,00 0,24 -0,76 275790,00 885780,00
697 … … … … … … … … … … … …
699 0,22 0,78 293304,00 1031272,00 0,16 0,84 2096012,00 11031107,00 0,17 0,83 2630150,00 12663690,00
Code1990-1995 1996-2012 1990-2012
611 Leather, 612 Manuf. of leather or compos. Leather, 613
Furskins, tanned or dressed, 621 Materials of rubber, 625
Rubber tyres, inner tubes for wheels, 629 Articles of rubber
n.e.s, 633 Cork manufactures, 634 Veneers, plywood,
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particle boards, 635 Wood manufactures n.e.s., 641 Paper
and paperboard, 642 Articles of paper or paperboard, 651
Textile yarn, 652 Cotton fabrics, woven, 653 Woven fabrics
of man-made textile mat., 654 Other textile fabrics, woven,
655 Knitted or crocheted fabrics, 656 Tulles, lace,
trimmings etc., 657 Special yarns and fabrics, 658 Made-up
articles of textile mat. n.e.s., 659 Floor coverings etc., 661
Lime, cement, constr. materials n.e.s., 662 Clay and
refractory constr. Materials, 663 Mineral manufactures
n.e.s., 664 Glass, 665 Glassware, 666 Pottery, 667 Pearls,
precious/semi-precious stones, 671 Pig iron, spiegeleisen
etc.; ferro-alloys, 672 Iron/steel ingots; semi-finished prod,
673 Flat-rolled prod. of iron/non-alloy steel, 674 Flat-rolled
prod. of iron or steel, plated, 675 Flat-rolled products of
alloy steel, 676 Iron and steel bars, incl. sheet piling, 677
Rails and tracks etc., of iron or steel, 678 Wire of iron or
steel, 679 Pipes, fittings etc. of iron or steel, 681 Silver,
platinum and platinum metals, 682 Copper, 683 Nickel, 684
Aluminium, 685 Lead, 686 Zinc, 687 Tin, 689 Base metals
employed in metallurgy, 691 Structures of iron, steel or
aluminium, 692 Metal containers for storage/transport, 693
Wire products and fencing grills, 694 Nails, screws, nuts,
bolts etc., 695 Hand or machine tools, 696 Cutlery, 697
Household equipment of base metal, 699 Manufactures of
base metal n.e.s.
In “Manufactured goods classified chiefly by
material” sectors which take place in Table
2, the number of industries which calculated
MIIT has increased since the entry into force
of the Agreement for the development of
trade relations after 1996. Primarily
industries which have the highest MIIT
values between the period of 1996-2012 are
651 Textile yarn,, 653 Woven fabrics of
man-made textile mat, 657 Special yarns and
fabrics, and 664 Glass.
When we look at all kind of calculated
indices, it can be seen trade between Israel
and Turkey in “Manufactured goods
classified chiefly by material” industries also
have the same marginal inter industry trade
structure with “Chemicals and related
products, n.e.s” industries. Industries whose
Brülhart A indices are equal to 0 and
Brülhart B indices take values close to ±1, in
other words which have the high adjustment
costs are 611, 642, 656, 662, 663, 679, 692,
and 695.
Table 3 demonstrates the MIIT values of
“Machinery and transport equipment”
industries. According to table with codes
713, 733, 741, 744 and 775 industries take
value zero for Brülhart A index and values
close to ±1 for Brülhart B index. Therefore
trade occurred industries in these have
highest adjustment costs and structure of
marginal inter industry trade. Besides this,
after the period which free trade agreement
enters into force in 1996 between Turkey
and Israel, it is obvious that the number of
trade occurred industries and the calculated
values of MIIT in these industries have both
increased in the same period.
728 Other mach. for particular industries,
735 Parts etc. for machines in 731/733, 743
Pumps, air compressors and fans etc, 747
Taps, cocks, valves etc, 748 Transm. shafts,
other speed changers, 749 Non-electric parts
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etc. of mach. n.e.s, 751 Office machines 752
Computers and units thereof, 772 Electrical
apparatus, 778 Electrical machinery and app.
n.e.s. industries have high MIIT values in
1990-2012 period’s trade between two
countries.
Table 3. MIIT indices between Turkey and Israel with sector of “Machinery and transport equipment”
A* B* C* UMCIT A* B* C* UMCIT A* B* C* UMCIT
711 … … … … … … … … … … … …
712 … … … … … … … … … … … …
713 0,97 -0,03 225972,00 8006,00 0,00 1,00 0,00 1314437,00 0,10 0,90 150714,00 1335877,00
714 … … … … … … … … … … … …
716 … … … … 0,21 -0,79 9665686,00 36194844,00 … … … …
718 … … … … 0,00 1,00 0,00 405509,00 … … … …
721 … … … … 0,37 -0,63 3410098,00 5691061,00 … … … …
722 … … … … … … … … … … … …
723 … … … … … … … … … … … …
724 0,00 1,00 0,00 1110609,00 … … … …
725 0,00 1,00 0,00 76893,00 … … … … … … … …
726 … … … … 0,05 -0,95 18686,00 367124,00 … … … …
727 … … … … 0,00 1,00 0,00 4079068,00 … … … …
728 0,80 0,20 1781116,00 449013,00 0,83 -0,17 5976710,00 1256240,00 0,91 -0,09 8657258,00 831055,00
731 0,00 1,00 0,00 198242,00 0,23 0,77 537032,00 1792331,00 0,17 0,83 448164,00 2123789,00
733 0,00 1,00 0,00 371811,00 0,05 0,95 135672,00 2767197,00 0,04 0,96 149344,00 3321560,00
735 0,00 1,00 0,00 84452,00 0,88 0,12 1649914,00 225407,00 0,84 0,16 1688316,00 328664,00
737 0,39 0,61 11560,00 17869,00 0,12 0,88 149896,00 1148815,00 0,12 0,88 157606,00 1208954,00
741 0,13 -0,87 270880,00 1737756,00 0,00 1,00 0,00 18146600,00 0,06 0,94 756482,00 11253164,00
742 0,36 0,64 335132,00 603029,00 … … … …
743 0,45 0,55 385310,00 463364,00 0,39 0,61 2093102,00 3211668,00 0,48 0,52 3000246,00 3282786,00
744 … … … … 0,00 1,00 0,00 2336163,00 1,00 0,00 3120970,00
745 … … … … 0,12 -0,88 3035914,00 21850996,00 … … … …
746 … … … … 0,03 0,97 14216,00 407983,00 … … … …
747 0,62 0,38 652856,00 398963,00 0,79 0,21 7797348,00 2052079,00 0,78 0,22 8874498,00 2475516,00
748 0,22 -0,78 82156,00 290741,00 0,40 0,60 1400668,00 2067443,00 0,65 0,35 2802482,00 1527610,00
749 0,12 0,88 14096,00 103256,00 0,78 0,22 2028126,00 566822,00 0,77 0,23 2047778,00 610506,00
751 … … … … 0,00 -1,00 0,00 5408590,00 … … … …
752 … … … … 0,03 -0,97 98768,00 3439825,00 … … … …
759 … … … … … … … … … … … …
761 … … … … 0,00 -1,00 0,00 5441668,00 … … … …
762 … … … … … … … … … … … …
763 … … … … 0,00 -1,00 0,00 217246,00 … … … …
764 … … … … 0,08 -0,92 497270,00 5914598,00 … … … …
771 … … … … 0,25 0,75 1164278,00 3453076,00 … … … …
772 0,79 0,21 659734,00 178371,00 0,70 0,30 6900560,00 2965991,00 0,72 0,28 7621422,00 2936170,00
773 … … … … 0,02 0,98 2129038,00 129273248,00 … … … …
774 … … … … 0,00 1,00 0,00 362474,00 … … … …
775 … … … … 0,00 1,00 191394,00 85641872,00 0,00 1,00 198886,00 88164120,00
776 … … … … 0,17 -0,83 652718,00 3280949,00
778 0,14 -0,86 168208,00 1043141,00 0,54 -0,46 16768642,00 14052397,00 0,50 -0,50 16884950,00 16823088,00
781 … … … … … … … … … … … …
782 … … … … … … … … … … … …
783 … … … … … … … …
784 … … … … 0,01 0,99 58296,00 11120246,00 … … … …
785 … … … … 0,00 1,00 0,00 228783,00 … … … …
786 … … … … 0,46 0,54 923602,00 1086383,00 … … … …
791 … … … … … … … … … … … …
792 … … … … … … … … … … … …
793 … … … … … … … … … … … …
Code1990-1995 1996-2012 1990-2012
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711 Steam or super-heated water boilers etc., 712 Steam
turbines and parts n.e.s. 713 Intern.-comb. piston engines
and parts, 714 Engines and motors, non-electric 716
Rotating electric plant and parts, 718 Power generators;
parts n.e.s. 721 Agricultural machinery and parts, 722
Tractors 723 Civil engineering/contractors equipm,. 724
Textile and leather machinery 725 Paper manufacturing
machinery, 726 Printing and bookbinding machinery 727
Food-processing machines, 728 Other mach. for particular
industries 731 Mach.-tools working by removing mat., 733
Machine-tools for working metal 735 Parts etc. for
machines in 731/733, 737 Metalworking machinery n.e.s.
741 Heating/cooling equipm.; parts n.e.s., 742 Pumps for
liquids; liquid elevators 743 Pumps, air compressors and
fans etc., 744 Mechanical handling equipment 745 Other
non-electrical machinery, 746 Ball or roller bearings 747
Taps, cocks, valves etc., 748 Transm. shafts, other speed
changers 749 Non-electric parts etc. of mach. n.e.s., 751
Office machines 752 Computers and units thereof, 759
Parts for office mach. and computers 761 TVs, video
monitors/projectors, 762 Radio-broadcast receivers 763
Sound rec. and reproducers, VCRs, 764 TelIITm.
equipment and parts n.e.s. 771 Electric power machinery
and parts, 772 Electrical apparatus 773 Equipm. for
distributing electr. n.e.s., 774 Electro-diagnostic,
radiological app. 775 Household equipm. electr. & non-
electr, 776 Electronic equipment and parts 778 Electrical
machinery and app. n.e.s., 781 Motor cars, not for public-
transport 782 Lorries, vans and special-purpose cars, 783
Road motor vehicles, n.e.s. 784 Parts etc. for motor
vehicles, 785 Motorcycles, cycles; invalid carriages 786
Trailers/semi-trailers; non-mech.vehicles, 791 Railway and
tramway vehicles 792 Aircraft and associated equipment,
793 Ships, boats and floating structures
Table 4. MIIT indices between Turkey and Israel with sector of “Miscellaneous manufactured articles”
A* B* C* UMCIT A* B* C* UMCIT A* B* C* UMCIT
811 … … … … … … … … … … … …
812 … … … … … … … … … … … …
813 … … … … 0,00 1,00 0,00 2932797,00 … … … …
821 0,00 1,00 0,00 440388,00 0,02 0,98 434194,00 20636360,00 0,01 0,99 126794,00 23018876,00
831 … … … … 0,96 0,04 715438,00 29688,00 … … … …
841 … … … … … … … … … … … …
842 … … … … 0,00 1,00 41332,00 60403544,00 … … … …
843 … … … … … … … … … … … …
844 … … … … … … … … … … … …
845 0,65 0,35 297150,00 162073,00 0,00 1,00 0,00 25846172,00 0,01 0,99 294020,00 26476046,00
846 0,00 1,00 0,00 158895,00 0,04 0,96 237608,00 5111997,00 0,02 0,98 114680,00 5372424,00
848 … … … … 0,00 1,00 0,00 518510,00 … … … …
851 … … … … 0,00 1,00 0,00 6106802,00 … … … …
871 … … … … 0,00 -1,00 1210,00 23789208,00 … … … …
872 0,00 1,00 0,00 1423067,00 0,18 -0,82 1827744,00 8505671,00 0,22 -0,78 1861396,00 6534560,00
873 0,00 1,00 0,00 1779524,00
874 0,09 -0,91 117924,00 1200267,00 0,11 -0,89 951516,00 7613383,00 0,09 -0,91 1034164,00 10000875,00
881 … … … … … … … … … … … …
882 … … … … … … … … … … … …
883 … … … … … … … … … … … …
884 … … … … 0,15 -0,85 240024,00 1341533,00 0,14 -0,86 239448,00 1475935,00
885 0,00 -1,00 0,00 8807,00 0,09 0,91 22382,00 229356,00 0,07 0,93 18664,00 231654,00
891 … … … … … … … … … … … …
892 0,48 -0,52 11382,00 12491,00 0,36 0,64 425446,00 754961,00 0,48 0,52 611450,00 666086,00
893 0,83 0,17 1260846,00 262359,00 0,16 0,84 9889264,00 50515276,00 0,19 0,81 11967402,00 50350916,00
894 0,00 1,00 0,00 147116,00 0,20 0,80 321326,00 1299004,00 0,23 0,77 405296,00 1357322,00
895 0,17 -0,83 48482,00 231655,00 0,06 -0,94 9414,00 139495,00 0,00 -1,00 0,00 223635,00
896 … … … … … … … … … … … …
897 … … … … 0,00 1,00 0,00 50667020,00 0,00 1,00 227762,00 50855936,00
898 0,00 -1,00 0,00 182054,00 0,00 -1,00 0,00 740620,00 0,00 -1,00 0,00 1283686,00
899 0,42 -0,58 272916,00 378474,00 0,60 -0,40 3896176,00 2576194,00 0,72 -0,28 5335296,00 2097010,00
Code1990-1995 1996-2012 1990-2012
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811 Prefabricated buildings 812 Sanitary, plumbing/heating
fixtures 813 Lighting fixtures and fittings, n.e.s. 821
Furniture and parts thereof 831 Trunks, handbags, wallets
etc. 841 Men's wear of woven fabrics 842 Women's wear of
woven fabrics 843 Men's wear, knitted or crocheted 844
Women's wear, knitted or crocheted 845 Apparel, n.e.s.;
babies' clothing 846 Accessories, of textile fabrics n.e.s.
848 Accessories, non-textile; headgear 851 Footwear 871
Optical instruments n.e.s. 872 Medical instruments n.e.s.
873 Meters and counters n.e.s. 874 Measuring/checking
instrum. n.e.s. 881 Photographic equipment n.e.s. 882
Photo/cinematographic supplies 883 Cinematograph films,
developed 884 Optical goods n.e.s. 885 Watches and clocks
891 Arms and ammunition 892 Printed matter 893 Articles
of plastics n.e.s. 894 Baby prams, toys, sporting goods 895
Office and stationery supplies n.e.s. 896 Artwork, coll.
pieces and antiques 897 Jewellery, gold/silversmiths' wares
898 Instruments; rIITrds, tapes etc. 899 Misc. manufactured
articles n.e.s.
The results associated with “Miscellaneous
manufactured articles” industries are shown
in Table 4. It is observed from the table that
FTA between two countries has little impact
on MIIT values in emerged structure of
trade. 821, 845, 846, 874, 885, 895, 897 and
898 coded industries have high adjustment
costs due to A and B indices. 892 Printed
matter and 899 Misc. manufactured articles
n.e.s industries have the highest MIIT values
between related periods.
Conclusion
This study focuses on the measurement of
Turkey’s marginal intra-industry trade with
Israel in dynamic sense by the use of
Brülhart’s A, B, and C indices, in addition to
Menon and Dixon’s UMCIT index. All
calculations are based on SITC Rev.3, 3
digit sectors data for the period of 1990-
2012. It is possible to summarize the
findings as follows. The MIIT indices results
demonstrate that in 5 coded “Chemicals and
related products, n.e.s." industries have the
structure of trade as marginal inter industry,
in other words these have high adjustment
costs. In 6 coded “Manufactured goods
classified chiefly by material” sector, the
number of industries which have a structure
of MIIT are increased after the entry into
force of the Free Trade Agreement between
two countries in 1996. According to
calculations, in 7 coded “Machinery and
transport equipment” industries have the
highest adjustment costs and structure of
marginal inter industry trade. Besides this,
after the period which Free Trade Agreement
enters into force in 1996, it is obvious that
the number of trade occurred industries and
the calculated values of MIIT in these
industries have both increased in the same
period. The results associated with
“Miscellaneous manufactured articles”
industries shows that Free Trade Agreement
between two countries has little impact on
MIIT values in emerged structure of trade.
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