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Does Economic Complexity Reduce Income Inequality? An Empirical Investigation on Turkish Economy

Year 2021, Volume: 13 Issue: 24, 130 - 147, 30.06.2021
https://doi.org/10.38155/ksbd.836261

Abstract

The production of knowledge and technology-intensive products is vital for countries to increase their global competitiveness. The products that require a more complex production process instead of primary products create added value and provide various advantages. Besides, because technology-intensive production requires skilled labor, it affects the institutional structure as well as the economic structure. In this structure, fair income distribution is one of the most basic human development conditions. Economic complexity, which measures the intensity of knowledge and technology in production, positively affects economic growth and leads to various consequences on income inequality. In this direction, it was aimed to test the relationship between income inequality, economic complexity, and openness indicators with the data set for the period 1987-2017 by using FMOLS, DOLS, and CCR estimators for the Turkish economy. The first established model concluded that economic complexity, economic growth, and human capital decrease income inequality, whereas the population increases. According to the second model results, foreign direct investments increase income inequality, and trade openness decreases. 

References

  • Adom, P. K., Amakye, K., Barnor, C. ve Quartey, G. (2015). The Long-Run Impact of Idiosyncratic and Common Shocks on Industry Output in Ghana. OPEC Energy Review, 39(1), 17-52.
  • Aiyar, S. S. ve Ebeke, C. (2019). Inequality of Opportunity, Inequality of Income and Economic Growth. IMF Working Paper WP/19/34, 1-24.
  • Antonelli, C. ve Scellato, G. (2019). Wage Inequality and Directed Technological Change: Implications for Income Distribution. Technological Forecasting & Social Change, 141, 59-65.
  • Bor, J., Cohen, G. H. ve Galea, S. (2017). Population Health in An Era of Rising Income Inequality: USA, 1980-2015. The Lancet, 389(10077), 1475-1490.
  • Brida, J. G., Carrera, E. J. S. ve Segarra, V. (2020). Clustering and Regime Dynamics for Economic Growth and Income Inequality. Structural Change and Economic Dynamics, 52, 99-108.
  • Bulut, U. (2017). The Impacts of Non-Renewable and Renewable Energy on CO2 Emissions in Turkey. Environmental Science and Pollution Research, 24(18), 15416-15426.
  • Butler, J. L., Wildermuth, G., Thiede, B. C. ve Brown, D. L. (2020). The Dynamics of Population Change and Income Inequality in Rural America. Doi: https://doi.org/10.31235/osf.io/g3yhe.
  • Chávez, J. C., Mosqueda, M. T. ve Gómez-Zaldívar, M. (2017). Economic Complexity and Regional Growth Performance: Evidence from the Mexican Economy. Review of Regional Studies, 47(2), 201-219.
  • Chyi Y. L. ve Su, Y. H. (2020). Technology Progress, Trade Openness, and Income Inequality: A Cross-Country Empirical Study. Tsounis N., Vlachvei A. (Eds), Advances in Cross-Section Data Methods in Applied Economic Research. ICOAE 2019. Springer Proceedings in Business and Economics (pp. 491-506). Springer, Cham.
  • Cristelli, M., Tacchella, A., Cader, M., Roster, K. ve Pietronero, L. (2017). On the Predictability of Growth. The World Bank Policy Research Working Paper 8117, 1-45.
  • Fawaz, F. ve Rahnama-Moghadamm, M. (2019). Spatial Dependence of Global Income Inequality: The Role of Economic Complexity. The International Trade Journal, 33(6), 542-554.
  • Felipe, J., Kumar, U., Abdon, A. ve Bacate, M. (2012). Product Complexity and Economic Development. Structural Change and Economic Dynamics, 23(1), 36-68.
  • Feng, S. ve Tang, G. (2019). Accounting for Urban China’s Rising Income Inequality: The Roles of Labor Market, Human Capital, and Marriage Market Factors. Economic Inquiry, 57(2), 997-1015.
  • Gao, J. ve Zhou, T. (2018). Quantifying China’s Regional Economic Complexity. Physica A: Statistical Mechanics and Its Applications, 492, 1591-1603.
  • Goh, L. T. ve Law, S. H. (2019). The Effect of Trade Openness on Income Inequality with the Role of Institutional Quality. Indonesian Journal of Economics, Social, and Humanities, 1(2), 65-76.
  • Hartmann, D. (2014). Economic Complexity and Human Development: How Economic Diversification and Social Networks Affect Human Agency and Welfare. New York: Routledge.
  • Hartmann, D., Jara-Figueroa, C., Guevara, M., Simoes, A. ve Hidalgo, C. A. (2016). The Structural Constraints of Income Inequality in Latin America. Integration & Trade Journal, 40, 70-85.
  • Hartmann, D., Guevara, M. R., Jara-Figueroa, C., Aristarán, M. ve Hidalgo, C. A. (2017). Linking Economic Complexity, Institutions, and Income Inequality. World Development, 93, 75-93.
  • Hausmann, R., Hidalgo, C. A., Bustos, S., Coscia, M., Chung, S., Jimenez, J., Simoes, A. ve Yıldırım, M. A. (2011). The Atlas of Economic Complexity Mapping Paths to Prosperity, Center for International Development at Harvard University.
  • Herzer, D., Hühne, P. ve Nunnenkamp, P. (2014). FDI and Income Inequality-Evidence from Latin American Economies. Review of Development Economics, 18(4), 778-793.
  • Hidalgo, C. A. ve Hausmann, R. (2009). The Building Blocks of Economic Complexity. Proceedings of the National Academy of Sciences, 106(26), 10570-10575.
  • Hidalgo, C. (2015). Why Information Grows: The evolution of Order, from Atoms to Economies. New York: Basic Books.
  • Hodgson, G. M. (2003). Capitalism, Complexity, and Inequality. Journal of Economic Issues, 37(2), 471-478.
  • Johansen S. ve Juselius, K. (1990). Some Structural Hypotheses in A Multivariate Cointegration Analysis of the Purchasing Power Parity and the Uncovered Interest Parity for UK. Journal of Econometrics, 53, 211-44.
  • Johansen, S. (1988). Statistical Analysis of Cointegration Vectors. Journal of Economic Dynamics and Control, 12(2-3), 231-254.
  • Kapartzanis, P. (2018). Unlinking Causally Economic Complexity and Income Inequality (MSc Thesis). University of Ioannina, Ioannina.
  • Kaulihowa, T. ve Adjasi, C. (2018). FDI and Income Inequality in Africa. Oxford Development Studies, 46(2), 250-265.
  • Khan, I. ve Nawaz, Z. (2019). Trade, FDI and Income Inequality: Empirical Evidence from CIS. International Journal of Development Issues, 18(1), 88-108.
  • Kuznets, S. (1955). Economic Growth and Income Inequality. American Economic Review, 45(1), 1-28.
  • Lapatinas, A. (2016). Economic Complexity and Human Development: A Note. Economics Bulletin, 36(3), 1441-1452.
  • Le Caous, E. ve Huarng, F. (2020). Economic Complexity and the Mediating Effects of Income Inequality: Reaching Sustainable Development in Developing Countries. Sustainability, 12(2089), 1-26.
  • Lee, K. ve Vu, T. (2019). Economic Complexity, Human Capital and Income Inequality: A Cross-Country Analysis. MPRA Paper No. 94737, 1-31.
  • Moghadasi, L. S. (2018). The Study of Economic Complexity and GDP Effect on Inflation Rate and Income Inequality in Persian Gulf States 2002-2015. Mapta Journal of Mechanical and Industrial Engineering (MJMIE), 2(3), 31-39.
  • Morais, M. B., Swart, J. ve Jordaan, J. A. (2018). Economic Complexity and Inequality: Does Productive Structure Affect Regional Wage Differentials in Brazil?. U.S.E. Working Paper Series nr: 18-11, 1-59.
  • Nwosa, P. (2019). Income Inequality and Economic Growth in Nigeria: Implications for Economic Development. Acta Universitatis Danubius Oeconomica Special Issue 15(1), 108-116.
  • Park, J. Y. (1992). Canonical Cointegrating Regressions. Econometrica: Journal of the Econometric Society, 119-143.
  • Penn World Table (2020, Mayıs). https://www.rug.nl/ggdc/productivity/pwt/.
  • Phillips, P. C. ve Hansen, B. E. (1990). Statistical Inference in Instrumental Variables Regression with I(1) Processes. The Review of Economic Studies, 57(1), 99-125.
  • Solt, F. (2019). Measuring Income Inequality Across Countries and Over Time: The Standardized World Income Inequality Database. SWIID Version 8.2, November 2019.
  • Stock, J. ve Watson, M. (1993). A Simple Estimator of Cointegrating Vectors in Higher Order Integrated Systems. Econometrica, 61(4), 783-820.
  • Şeker, A. (2019). Teknolojik Gelişme ve Yüksek Teknoloji İhracatının Ekonomik Karmaşıklık Endeksi Üzerindeki Etkisi: Türkiye Örneği. Yönetim ve Ekonomi: Celal Bayar Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 26(2), 377-395.
  • TheGlobalEconomy.com (2020, Mayıs). https://www.theglobaleconomy.com/.
  • The Observatory of Economic Complexity (2020, Nisan). https://oec.world/.
  • Vo, D. H., Nguyen, T. C. ve Tran, N. P. (2019). What Factors Affect Income Inequality and Economic Growth in Middle-Income Countries?. Journal of Risk and Financial Management, 12(1), 40, 1-12.
  • Zhu, S. ve Li, R. (2017). Economic Complexity, Human Capital and Economic Growth: Empirical Research Based on Cross-Country Panel Data. Applied Economics, 49(38), 3815-3828.
  • Zhu, S., Yu, C. ve He, C. (2020). Export Structures, Income Inequality and Urban-Rural Divide in China. Applied Geography, 115, 1-9.
  • Zivot, E. ve Andrews, D. (1992). Further Evidence of the Great Crash, the Oil-Price Shock and the Unit-Root Hypothesis. Journal of Business and Economic Statistics, 10, 251-270.
  • Zortuk, M. (2009). Economic Impact of Tourism on Turkey’s Economy: Evidence from Cointegration Tests. International Research Journal of Finance and Economics, 25(3), 231-239.

Ekonomik Karmaşıklık Gelir Eşitsizliğini Azaltır Mı? Türkiye Ekonomisi Üzerine Ampirik Bir İnceleme

Year 2021, Volume: 13 Issue: 24, 130 - 147, 30.06.2021
https://doi.org/10.38155/ksbd.836261

Abstract

Ülkelerin küresel rekabet gücünü artırabilmeleri için bilgi ve teknoloji-yoğunluklu ürünlerin üretilmesi hayati bir öneme sahiptir. Birincil ürünler yerine daha karmaşık üretim süreci gerektiren mal ve hizmetlerin üretilmesi, yarattığı katma değere bağlı olarak ülke ekonomisinde önemli avantajlar sağlamaktadır. Bunun yanında teknoloji-yoğun üretim, nitelikli işgücü gerektirdiği için ekonomik yapıyla beraber kurumsal yapıyı da etkilemektedir. Bu yapı içerisinde insani gelişim açısından adil gelir dağılımı en temel koşulların başında gelmektedir. Üretimdeki bilgi ve teknoloji yoğunluğunu ölçen ekonomik karmaşıklık, ekonomik büyümeyi pozitif etkilemekle birlikte gelir eşitsizliği üzerinde de bazı sonuçlara yol açmaktadır. Bu doğrultuda, Türkiye ekonomisi için 1987-2017 dönemine ait veri seti ile gelir eşitsizliği, ekonomik karmaşıklık ve dışa açıklık göstergeleri arasındaki ilişkinin FMOLS, DOLS ve CCR tahmincileri ile test edilmesi amaçlanmıştır. Kurulan ilk modelde ekonomik karmaşıklık, ekonomik büyüme ve beşeri sermayenin gelir eşitsizliğini azalttığı, nüfusun ise artırdığı sonucuna ulaşılmıştır. İkinci modelin sonuçlarına göre doğrudan yabancı yatırımlar gelir eşitsizliğini artırmakta, ticari açıklık ise azaltmaktadır. 

References

  • Adom, P. K., Amakye, K., Barnor, C. ve Quartey, G. (2015). The Long-Run Impact of Idiosyncratic and Common Shocks on Industry Output in Ghana. OPEC Energy Review, 39(1), 17-52.
  • Aiyar, S. S. ve Ebeke, C. (2019). Inequality of Opportunity, Inequality of Income and Economic Growth. IMF Working Paper WP/19/34, 1-24.
  • Antonelli, C. ve Scellato, G. (2019). Wage Inequality and Directed Technological Change: Implications for Income Distribution. Technological Forecasting & Social Change, 141, 59-65.
  • Bor, J., Cohen, G. H. ve Galea, S. (2017). Population Health in An Era of Rising Income Inequality: USA, 1980-2015. The Lancet, 389(10077), 1475-1490.
  • Brida, J. G., Carrera, E. J. S. ve Segarra, V. (2020). Clustering and Regime Dynamics for Economic Growth and Income Inequality. Structural Change and Economic Dynamics, 52, 99-108.
  • Bulut, U. (2017). The Impacts of Non-Renewable and Renewable Energy on CO2 Emissions in Turkey. Environmental Science and Pollution Research, 24(18), 15416-15426.
  • Butler, J. L., Wildermuth, G., Thiede, B. C. ve Brown, D. L. (2020). The Dynamics of Population Change and Income Inequality in Rural America. Doi: https://doi.org/10.31235/osf.io/g3yhe.
  • Chávez, J. C., Mosqueda, M. T. ve Gómez-Zaldívar, M. (2017). Economic Complexity and Regional Growth Performance: Evidence from the Mexican Economy. Review of Regional Studies, 47(2), 201-219.
  • Chyi Y. L. ve Su, Y. H. (2020). Technology Progress, Trade Openness, and Income Inequality: A Cross-Country Empirical Study. Tsounis N., Vlachvei A. (Eds), Advances in Cross-Section Data Methods in Applied Economic Research. ICOAE 2019. Springer Proceedings in Business and Economics (pp. 491-506). Springer, Cham.
  • Cristelli, M., Tacchella, A., Cader, M., Roster, K. ve Pietronero, L. (2017). On the Predictability of Growth. The World Bank Policy Research Working Paper 8117, 1-45.
  • Fawaz, F. ve Rahnama-Moghadamm, M. (2019). Spatial Dependence of Global Income Inequality: The Role of Economic Complexity. The International Trade Journal, 33(6), 542-554.
  • Felipe, J., Kumar, U., Abdon, A. ve Bacate, M. (2012). Product Complexity and Economic Development. Structural Change and Economic Dynamics, 23(1), 36-68.
  • Feng, S. ve Tang, G. (2019). Accounting for Urban China’s Rising Income Inequality: The Roles of Labor Market, Human Capital, and Marriage Market Factors. Economic Inquiry, 57(2), 997-1015.
  • Gao, J. ve Zhou, T. (2018). Quantifying China’s Regional Economic Complexity. Physica A: Statistical Mechanics and Its Applications, 492, 1591-1603.
  • Goh, L. T. ve Law, S. H. (2019). The Effect of Trade Openness on Income Inequality with the Role of Institutional Quality. Indonesian Journal of Economics, Social, and Humanities, 1(2), 65-76.
  • Hartmann, D. (2014). Economic Complexity and Human Development: How Economic Diversification and Social Networks Affect Human Agency and Welfare. New York: Routledge.
  • Hartmann, D., Jara-Figueroa, C., Guevara, M., Simoes, A. ve Hidalgo, C. A. (2016). The Structural Constraints of Income Inequality in Latin America. Integration & Trade Journal, 40, 70-85.
  • Hartmann, D., Guevara, M. R., Jara-Figueroa, C., Aristarán, M. ve Hidalgo, C. A. (2017). Linking Economic Complexity, Institutions, and Income Inequality. World Development, 93, 75-93.
  • Hausmann, R., Hidalgo, C. A., Bustos, S., Coscia, M., Chung, S., Jimenez, J., Simoes, A. ve Yıldırım, M. A. (2011). The Atlas of Economic Complexity Mapping Paths to Prosperity, Center for International Development at Harvard University.
  • Herzer, D., Hühne, P. ve Nunnenkamp, P. (2014). FDI and Income Inequality-Evidence from Latin American Economies. Review of Development Economics, 18(4), 778-793.
  • Hidalgo, C. A. ve Hausmann, R. (2009). The Building Blocks of Economic Complexity. Proceedings of the National Academy of Sciences, 106(26), 10570-10575.
  • Hidalgo, C. (2015). Why Information Grows: The evolution of Order, from Atoms to Economies. New York: Basic Books.
  • Hodgson, G. M. (2003). Capitalism, Complexity, and Inequality. Journal of Economic Issues, 37(2), 471-478.
  • Johansen S. ve Juselius, K. (1990). Some Structural Hypotheses in A Multivariate Cointegration Analysis of the Purchasing Power Parity and the Uncovered Interest Parity for UK. Journal of Econometrics, 53, 211-44.
  • Johansen, S. (1988). Statistical Analysis of Cointegration Vectors. Journal of Economic Dynamics and Control, 12(2-3), 231-254.
  • Kapartzanis, P. (2018). Unlinking Causally Economic Complexity and Income Inequality (MSc Thesis). University of Ioannina, Ioannina.
  • Kaulihowa, T. ve Adjasi, C. (2018). FDI and Income Inequality in Africa. Oxford Development Studies, 46(2), 250-265.
  • Khan, I. ve Nawaz, Z. (2019). Trade, FDI and Income Inequality: Empirical Evidence from CIS. International Journal of Development Issues, 18(1), 88-108.
  • Kuznets, S. (1955). Economic Growth and Income Inequality. American Economic Review, 45(1), 1-28.
  • Lapatinas, A. (2016). Economic Complexity and Human Development: A Note. Economics Bulletin, 36(3), 1441-1452.
  • Le Caous, E. ve Huarng, F. (2020). Economic Complexity and the Mediating Effects of Income Inequality: Reaching Sustainable Development in Developing Countries. Sustainability, 12(2089), 1-26.
  • Lee, K. ve Vu, T. (2019). Economic Complexity, Human Capital and Income Inequality: A Cross-Country Analysis. MPRA Paper No. 94737, 1-31.
  • Moghadasi, L. S. (2018). The Study of Economic Complexity and GDP Effect on Inflation Rate and Income Inequality in Persian Gulf States 2002-2015. Mapta Journal of Mechanical and Industrial Engineering (MJMIE), 2(3), 31-39.
  • Morais, M. B., Swart, J. ve Jordaan, J. A. (2018). Economic Complexity and Inequality: Does Productive Structure Affect Regional Wage Differentials in Brazil?. U.S.E. Working Paper Series nr: 18-11, 1-59.
  • Nwosa, P. (2019). Income Inequality and Economic Growth in Nigeria: Implications for Economic Development. Acta Universitatis Danubius Oeconomica Special Issue 15(1), 108-116.
  • Park, J. Y. (1992). Canonical Cointegrating Regressions. Econometrica: Journal of the Econometric Society, 119-143.
  • Penn World Table (2020, Mayıs). https://www.rug.nl/ggdc/productivity/pwt/.
  • Phillips, P. C. ve Hansen, B. E. (1990). Statistical Inference in Instrumental Variables Regression with I(1) Processes. The Review of Economic Studies, 57(1), 99-125.
  • Solt, F. (2019). Measuring Income Inequality Across Countries and Over Time: The Standardized World Income Inequality Database. SWIID Version 8.2, November 2019.
  • Stock, J. ve Watson, M. (1993). A Simple Estimator of Cointegrating Vectors in Higher Order Integrated Systems. Econometrica, 61(4), 783-820.
  • Şeker, A. (2019). Teknolojik Gelişme ve Yüksek Teknoloji İhracatının Ekonomik Karmaşıklık Endeksi Üzerindeki Etkisi: Türkiye Örneği. Yönetim ve Ekonomi: Celal Bayar Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 26(2), 377-395.
  • TheGlobalEconomy.com (2020, Mayıs). https://www.theglobaleconomy.com/.
  • The Observatory of Economic Complexity (2020, Nisan). https://oec.world/.
  • Vo, D. H., Nguyen, T. C. ve Tran, N. P. (2019). What Factors Affect Income Inequality and Economic Growth in Middle-Income Countries?. Journal of Risk and Financial Management, 12(1), 40, 1-12.
  • Zhu, S. ve Li, R. (2017). Economic Complexity, Human Capital and Economic Growth: Empirical Research Based on Cross-Country Panel Data. Applied Economics, 49(38), 3815-3828.
  • Zhu, S., Yu, C. ve He, C. (2020). Export Structures, Income Inequality and Urban-Rural Divide in China. Applied Geography, 115, 1-9.
  • Zivot, E. ve Andrews, D. (1992). Further Evidence of the Great Crash, the Oil-Price Shock and the Unit-Root Hypothesis. Journal of Business and Economic Statistics, 10, 251-270.
  • Zortuk, M. (2009). Economic Impact of Tourism on Turkey’s Economy: Evidence from Cointegration Tests. International Research Journal of Finance and Economics, 25(3), 231-239.
There are 48 citations in total.

Details

Primary Language Turkish
Journal Section Articles
Authors

Orhan Cengiz 0000-0002-1883-4754

Müge Manga 0000-0003-2675-2182

Publication Date June 30, 2021
Submission Date January 30, 2021
Published in Issue Year 2021 Volume: 13 Issue: 24

Cite

APA Cengiz, O., & Manga, M. (2021). Ekonomik Karmaşıklık Gelir Eşitsizliğini Azaltır Mı? Türkiye Ekonomisi Üzerine Ampirik Bir İnceleme. Karadeniz Sosyal Bilimler Dergisi, 13(24), 130-147. https://doi.org/10.38155/ksbd.836261