Academic journal article Journal of International Business Research

Turkey's Economic Integration with the EU: An Evaluation of Current Status and Future Prognosis

Academic journal article Journal of International Business Research

Turkey's Economic Integration with the EU: An Evaluation of Current Status and Future Prognosis

Article excerpt

INTRODUCTION

Socio-political standing of Turkey is so unique that it offers a very unique and interesting model for European Union integration. Its desire to enter Single Market Europe was intensified in recent years with the enlargement of the European Union. Turkey has been seeking to become a member of the European Union (EU) for nearly four decades. Most likely, Turkey's integration with the EU will remove the distortions in their price system, which in turn will boost the efficiency of their economy. This economic efficiency will make the country a better place for foreign direct investment. Thus, the efficiency gains from integration will be boosted by induced capital formation. However, Turkey's most recent effort to enter the EU in 2002 has been denied by the EU. Although, countries such as Poland, Hungary, Czech Republic, Greece, Cypress, Slovenia, Malta, and many others entered the EU in May of 2004. Bulgaria and Romania also got admitted to EU effective January 1, 2007, while Turkey still remains outside. Therefore, it will be beneficial to study the future prognosis of Turkey's economy using forecasted data on economic factors. Turkey has been a very faithful and loyal NATO member. During World War II, Turkey remained neutral until February 1945, when it joined the Allies. During the Cold War, Turkey allied itself with the western world. Turkey's long standing economic relationship with the western world is undeniable. Its capital city is located in Europe. In 1963, European Community signed an association agreement with Turkey that envisioned the mutual lowering of trade and migration barriers. In 1973, a protocol addendum was signed and a joint commission was established for removing migration barriers between the EC and Turkey by 1986. But, no advancement has been made to lower the trade and migration barriers until 1982 due to a military coup that took place in 1980. As a result, the EC suspended its relations with Turkey. In spite of all these negative developments, Turkey applied for EU membership in 1987 and it was rejected by the EU. Latest attempt by Turkey to join the union was blocked at the Copenhagen Summit in December of 2002. However, EU pledged Turkey that if it carries out certain criteria on human rights and democracy by December 2004, accession talks could begin soon. The basic motivation for European integration is to establish a single market for goods, services, and capital among the member nations of the EU. Since this is the premise on which the EU expansion drive is advanced, Turkey should then be examined on the economic dimensions of integration (Naidu and Choudhury, 2005). Other researchers also studied various dimensions of Turkey's country profiles (see, Lejour and de Mooij, 2005; Tausch, 2003; Harrison, Rutherford, and Tarr, 1997) for EU integration.

The real issue is that European integration and enlargement does not have the same geopolitical meaning for all of its member countries. Therefore, there is no certainty among the current EU members to accept Turkey in the union. The grounds for this disagreement are numerous. Former French president Valery Giscard d'Estaing the architect of EU constitution, objected to Turkish membership because of its "different culture, different approach, and different way of life." Blocking Turkey from entering the EU contradicts the Union's motto: "Unity in diversity." Resistance for Turkey's entry into the union comes from many directions. Turkey's cultural identity (Islam), social structures (for example, the strong role of military), and demography (projected to be the EU's most populated country in ten years) is perceived to be fundamentally disruptive for a consistent European union. At the center of this issue lies the concern about the continuing disharmony among Turks as to the cultural and social structure of their society. There were several events of social and cultural disharmonies between these two factions occurred time to time. …

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