Journal of International Business and Economics

Impact of Turkey’s Zero Problem Policy Upon Trade with the Neighboring Islamic Countries and Comparison with the Preferred Trade Blocs: An Empirical Analysis 1992-2011
Murat Ustaoğlu, Ahmet İncekara

Abstract
Turkey holds a special place in one of the most strategic regions in the world and connects the European and Asian continents. It also has important advantages in terms of commercial activities thanks to naval transportation facilities to the North African countries. Despite the geographical advantages, its trade with the neighboring countries has remained limited up to early 2000s. One of the primary reasons for this lack of improved trade is the failure in the Turkish foreign policy to focus on the Middle Eastern countries due to its traditional policy of Westernization. Since the remarkable changes in the identity of Turkish foreign policy and adoption of the zero-problem policy with the neighboring countries, trading activities have intensified and Turkey has improved its economic relations with the Islamic countries in the last decade. The global economic crisis that erupted in 2007 in the US has influenced almost the entire European continent whereas its impacts have remained limited upon Turkey thanks to its improved ties with the Middle Eastern countries. However, the developments associated with the Arab Spring process have led to serious criticisms towards the zero-problem policy. Turkey has been negatively influenced by the process as evidenced in the decline in the volume of trade with these countries. The trajectory of the developments in the years to come remains unclear. However, the general conviction tells that the people will become more assertive and decisive in the political stage in Arab countries and this will boost economic demand in the region, serving the economic interests of Turkey. This study examines the impacts of the zero-problem policy upon Turkey’s economic relations with the Islamic countries and further analyzes the economic consequences of the future political developments.

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