The Effect of Political Relations on Turkey-Russia International Trade

Nowadays foreign trade undoubtedly takes an important place in every country’s economy. A lot of research being done on the factors to determine the volume and the structure of foreign trade. GDP, relative price, and exchange rate are some of the main the indicators researchers focus on during the research process. However, it is very important to keep in consideration of others external factors during this process, such as political relations between the involved countries has a great influence on their bilateral foreign trade. Thus, this research paper focuses on the impact of the political decisions made by parties involved and its effect on their trade relations. This paper will examine long run determinants of the trade balance between Turkey and Russia, giving particular focus to the influence of the political relations between these two countries on their foreign trade. This paper focuses on changes on trade balance between these countries during the political crisis and after. The research is conducted by using quarterly trade data over the period from 1900 to 2017. Embedded Research Design is used to enable the researcher to use both quantitative and qualitative data. For the collection of qualitative and quantitative data, the research adopted the Explanatory design and Ex Post Facto design, respectively. The study also uses the ANOVA model to synthesize and estimate the variations in the trade relations between these countries during the 17-year period targeted in this research. As a conclusion the paper confirms and defines possible long run and short run negative effects of political disputes on countries trade balance with involving parties.