Turkish Delight - Does Turkey's Accession to the EU Bring Economic Benefits?

Abstract

We explore the economic implications of the possible Turkish accession to the European Union. We focus on three main changes associated with Turkish membership: (i) accession to the internal European Market; (ii) institutional reforms in Turkey triggered by EU membership; and (iii) migration in response to the free movement of workers. Overall, the macroeconomic implications for EU countries are small but positive. European exports increase by around 20 percent. Turkey experiences larger economic gains than the EU: consumption per capita is estimated to rise by about 4 percent as a result of accession to the internal market and free movement of labour. If Turkey would succeed in reforming its domestic institutions in response to EU-membership, consumption per capita in Turkey could raise by an additional 9 percent. These benefits would spill over to the EU.

Keywords: Turkey, regional economic integration, general equilibrium model, gravity equations, institutional reform, migration

JEL Classification: F13, F15