An Empirical Investigation on Validity of Linder Hypothesis in Turkey’s Export: Findings from Augmented Gravity Model

Abstract

In this study, the validity of Linder hypothesis on Turkey's goods exports is questioned empirically in 2003-2018 period. Analysis carried out for this purpose also serve to answer the question of what factors shaping the exports of Turkey. While the Augmented Gravity Model is used in the analysis of the study, Fixed Effects, Hausman-Taylor and Amemiya-MaCurdy methods are used in the estimation process of the econometric model. The findings of the study show that basic Gravity variables meet theoretical expectations, but not validity of Linder Hypothesis for Turkey's exports is reached. In this context, Turkey's goods exports are determined by differences in factor endowments rather than similarity preferences between country pairs. These finding refers to importance of increased vertical specialization for Turkey’s export. In this context, it can be said that access to the targeted export level depends on successful performance in joining global value chains.