The Increase in the GDP of Turkey and the European Union Generated by their Bilateral Trade as a Result of a Multiplier Effect in 1996–2008

Abstract

Team researches, the results of which were presented in a shortened
report, were the second attempt to empirically verify the operational multiplier
model in an open economy. They deal with the multiplier effects in Turkey
(formerly also Poland) and the European Union generated by their bilateral
trade. In order to guarantee the comparability of the results, the same model
construction and the same range of multiplier variability were used. Therefore,
in both researches the numerical data necessary for the establishment
of the upper multiplier limit could be based on the same statistical quantities
referring to the European Union that had been published by the Eurostat.
The research results make it possible to state that the multiplier process,
the reality of which was questioned by the Austrian School and neo-liberalism
that followed, exists in practice and its effects can be quantified. In case of
Turkey, the weighted mean multiplier in the period of thirteen years was 2.69
while in the EU it was 3.35. The increase in the GDP generated by their bilateral
trade in the whole examined period reached the level of 78 billion euro
in Turkey and 112 billion euro in the EU. The development of the multiplier
as well as the increases in the GDP shows regularities similar to those in the
research into the bilateral trade between Poland and the EU.