THE IMPACT OF INDUSTRIAL SECTOR COMPETITIVENESS ON ECONOMIC GROWTH IN OECD COUNTRIES

Abstract

THE IMPACT OF INDUSTRIAL SECTOR COMPETITIVENESS ON ECONOMIC GROWTH IN OECD COUNTRIES

Abstract

The industrial sector plays a crucial role in generating added value and contributing to foreign trade, while simultaneously fostering a nation's technological and innovative capacities. Through research and development (R&D) and innovation, the sector drives the development of new products and production techniques, resulting in enhanced productivity and, consequently, accelerating economic growth. Moreover, the industrial sector bolsters broader economic development by stimulating investments in infrastructure and other key sectors. This study examines which industrial sectors most effectively promote economic growth, hypothesizing that industrial productivity and sustainable growth are positively influenced by targeted investments. The analysis, conducted using the Panel ARDL model with data from 1999-2021 for 38 OECD countries, assesses the impact of industrial competitiveness on economic growth. Competitiveness data, obtained from the World Trade Organization, includes the Vollrath Relative Trade Advantage (RTA) index, derived from sectoral import and export statistics. Long-term results demonstrate that competitiveness enhances economic growth across all sectors, except for iron and steel, with the textile sector being particularly influential. In contrast, short-term findings reveal a negative impact of iron and steel sector competitiveness on growth. The results emphasize the importance of prioritizing highly competitive sectors to promote sustained economic growth.

Keywords

• Competitiveness
• Industrial Sectors
• Economic Growth
• OECD

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