Our findings reveal that making a regional trade agreement with Bulgaria, Greece and Romania may provide a strong competitive effect and increasing returns for Turkey. Besides, Turkey may benefit from spillover and feedback effects that may occur from a regional trade agreement with these countries. On the other hand, there may be limitations to signing the trade agreement among Bulgaria, Greece, Romania and Turkey since Greece is an existing member of the Euro area. However, there have been ongoing debates whether Greece should leave the Euro and return to the drachma. Thus, signing regional trade agreement with Bulgaria, Romania and Turkey may be an alternative to the Euro area and be advantageous for Greece. Since Greece has a relatively higher inflation rate than Bulgaria, Romania and Turkey; by signing a regional trade agreement, Greece may purchase goods from Bulgaria, Romania and Turkey at lower prices, which in turn have a positive impact on inflation. Furthermore, for overcoming the negative effects of the economic recession, Bulgaria, Greece and Romania may benefit from a possible regional trade agreement since increased competition may lead to the rationalization of production and the removal of inefficient duplication of plants and may cause firms to cut prices and expand their sales.
Posted on: Tue, 17 Sep 2013 13:04:50 +0000
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