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