Turkey and Europe: The role of migration and trade in economic development

Abstract

The economic linkage of Turkey with Europe is marked by substantial labour flows and comparatively small investment and trade flows. In the late 1990s, a new stage of economic development has been reached. The rapidly growing Turkish economy is in need of skilled personnel, attracting largely second generation migrants of Turkish descent. At the same time the growth rate of commodity trade lost momentum, as skill shortages put a break on the economic growth potential of Turkey. The onset of reciprocal migration flows may be linked to the relocation of low tech production from Europe to Turkey, leading to rising intra-country trade. The direct linkage between migration and trade is, however, muted by the endogenous migration dynamics resulting from family reunion.