AN INTERTEMPORAL, MULTI-REGION GENERAL EQUILIBRIUM MODEL OF AGRICULTURAL TRADE LIBERALIZATION IN THE SOUTH MEDITERRANEAN NICs, TURKEY, AND THE EUROPEAN UNION

With the aid of an intertemporal, multi-region general equilibrium model, we studyissues of agricultural trade liberalization, growth and capital accumulation in the context of aworld economy moving towards a multi-polar structure. We specifically focus on Turkey, theEuropean Union, the Middle East, and the Economies in Transition; and study alternativescenarios of formation of customs unions and increased trade orientation.The model is based on intertemporal general equilibrium theory with Ramsey-typedynamics. The world economy is fully endogenized within a 9-region specification, withTurkey, EU, Middle East and the Transition Economies constituting as one of the indigenousregions. A key feature of the model is its explicit recognition of both the commodity andforeign capital flows across regions in an endogenous setting, and its explicit portrayal of theout-of-steady state dynamics under an intertemporal optimization framework. We explore theshort- versus the long-run economic impacts of alternative trade and investment policies onagricultural production, foreign trade, resource allocation, accumulation, consumer welfare,and income distribution in the regions of analysis. Our results reveal significant gains fromincreased bilateral trade between the identified regions, and further underscore the crucialimportance of financing commodity trade deficits in sustaining the accumulation patterns.