Estimation of Turkey's Import Demand Elasticity for Lint Cotton: An ARDL Bounds Testing Approach

This study estimates Turkey's import demand model for lint cotton between 1966-2009, utilizing the bounds testing approach to cointegration. The autoregressive distributed lag model (ARDL) demonstrates that there is a long-term relationship between the variables. While the import demand for lint cotton is escalated by income and liberalization policies in the long-run, it is estimated that relative prices and production/consumption coverage ratio will decrease. With the lifting of quotas in 2005, Turkey's textile and apparel sector gained competitive advantage over the competitors in other countries and increased its profitability. Thus, the increase in imports continues as the domestic cotton production fails to meet the demand of the textile sector.