REVEALED COMPARATIVE ADVANTAGE AND COMPETITIVENESS OF THE TURKISH MANUFACTURING SECTOR IN THE EUROPEAN MARKET

Year 2012, Volume: 4 Issue: 2, 21 - 35, 01.12.2012

Betul Altay Topcu Emine Kılavuz

Abstract

The purpose of this paper is to analyse the competitive performance of the
Turkish Manufacturing Sector after the Custom Union Agreement with the EU
and to determine whether or not the pattern of comparative advantage for Turkey
has undergone a structural shift over the period 1996-2006. Then we examine if
Turkey’s pattern of comparative advantage is related with industry-level
productivity differentials or with differences in factor endowments. The
manufacturing sector was chosen because the Custom Union covers all industrial
goods but does not address agricultural products (except processed agricultural
products), service or public procurement. The Revealed Comparative Advantages
(RCA) index and Vollrath’s competitiveness indices are used to identify whether
or not Turkey has a comparative advantage in any particular product group. In the
calculating of these indices, the manufacturing industry is divided into four groups
according to intensity of technology: high-tech industries, medium-to-high-tech
industries, medium-to-low-tech industries and low-tech industries. It is known
that a Custom Union can, in theory, have significant dynamic effects, such as
increased competition, stimulation of technical change and investment. There are
a number of studies where RCA has been used to investigate the competitiveness
of Turkish exports. This study differs from others in terms of the classification of
manufacturing sectors according to their technological characteristics.
In the 20th century, technological change became recognized as the most
important source of economic growth. According to RCA and Vollrath’s indices,
Turkey has a comparative advantage in a few low-tech and medium-to-low-tech
industries while it has a comparative disadvantage in high-technological products
againstEU. Therefore, we can say that the Custom Union has not played an
important role in effecting changes in trade patterns and comparative advantages
in the Turkish manufacturing sector.

Keywords

Revealed Comparative Advantage, Specialization, Competitiveness Measures

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