4 examination of partner-country data. 2/ Turkish exports are recorded both by the Turkish authorities and by the importing country, so one has two sets of statistical records with regard to Turkey's exports. Apart from transpurt and insurance cost, it Is reasonable to expect that export value recorded at the port of shipment will exceod the import value recorded at the port of entry whenever export over-invoicing takes place. There is no reason to expect overinvoicing by foreign importers; after all they do not raceive the export subsidies, and might have to pay higher tariffs if they would over-invoice. Before comparing Turkish statistics to corresponding trading partner trade data for an assessment of the extent of over- and under-invoicing, one adjustment needs to be made. As imports statistics are recorded on a c.i.f basis while export statistics are recorded f.o.b, the two sets of numbers are not directly compurable. To make this data comparable, we take c.i.f/ f.o.b ft..ors from the International Financial Statistics (IMF) for Turkey's nine major trading partners in the OECD. Celasun and Rodrik (1988) (who use an across the board 8 correction factor) apply another correction; they lag trading partner data by no less than three months to correct for the time spent in transport. This would seem excessive given Turkey's proximity to its main trading partners, Germany and Italy. Since no higher frequency data are available than quarterly data, we go to the other extreme and make no adjustment for this lag. This would seem more appropriate, since transport to these countries takes at most a few days. Overestimating the time spent in transport leads to a strong upward bias **it** she estimate of overinvoicing in the post 1980 period since exports were growing so rapidly.

Figure 1 summarizes the results of the exercise for the period between 1969 and 1987. RXNO corresponds to exports to non-oil countries based on Turkish data while RXNOC corrects for the difference between the records in Turkey's main 9 OECD trading partners and the Turkish records on exports to these countries. Especially in tne late 1970s, exports to the OECD have been subject to under-invoicing, presumably because of the much higher black market premium in that period (cf Fig. 1;). But starting in 1981, there is overinvoicing. It reached its peak in 1984, at 28 percent. The subsequent decline in over-invoicing corresponds to the period in which export subsidies were reduced. In 1987 however, over-invoicing has gone up again, because of the introduction of large subsidies in late 1986.

But altogether the conclusion should be clear from Fig.l: the partnercountry data comparisons reveal some over- and under-invoicing, but really not to a substantial extent. The "corrected" figures still show a very sharp increase in exports to the OECD. Thus the Turkish export boom is for real. There are several factors which have contributed to the Turkish export boom since 1980. Outward-oriented growth policy, the sustained real depreciation, export subsidies, and very favorable market conditions in the Niddle East, at least until 1984, have all played a role. Real exchange rate depreciation and the boom in the oil countries have beer b,rought up already; we therefore turn immediately to the export incentive regime below, in Section 2.2.

# 2.2 Export Incentives

2 The source of the data is the Directions of Trade Statistics data tape compiled by the IMF.