Abstract
This study identifies the key industries with latent comparative advantages which have the potential to stimulate economic growth and structural change in Turkey (Türkiye). The New Structural Economics asserts that factor endowment differences dictate systematic structural differences in the economy. This factor endowment evolves over time and determines the latent comparative advantages of the economy. For successful industrial upgrading, economic growth and catching up, the industrial structure should be chosen to fit the given factor endowment best. To identify industries with latent comparative advantages, this study exploited the growth identification and facilitation framework proposed by New Structural Economics for the Turkish economy. Along with the pure growth identification and facilitation framework methodology, this study also benefits from product space tools, namely PRODY, measuring the income/productivity level of goods; EXPY, measuring the income/productivity level of a country’s export basket, and economic complexity and complexity outlook indices. The Baltic countries (Estonia, Latvia, Lithuania), and Poland and Slovakia, were identified and selected as benchmark countries for comparison. Based on the export structure comparison of benchmark countries, the results indicate that Turkey has latent comparative advantages in agricultural and some labor-intensive industries. The most binding constraints of the identified products and industries with latent comparative advantages were detected via growth diagnostic analysis. In light of the results, measures that ease latent comparative advantages have been proposed for certain industries to reduce production cost, enhance competitiveness in national and global markets, and foster the Turkish economy's economic transformation.
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The data that used in this study have been showed in the tables as well as figures.
Notes
Numbers in the square brackets indicate the Standard International Trade Classification (SITC) codes.
High industrial connectivity has led to the selection of sectors with high forward and backward linkages. It has been stated that structural change can be initiated by directing the scarce capital resources to the key identified sectors due to the relatively higher contribution of sectors with a higher industrial cohesion structure to economic growth.
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Acknowledgements
This study is compiled from the master’s dissertation of Eren Can Gurbuz at the Institute of Social Sciences, Mersin University and supported by the Ministry of National Education of the Republic of Turkey (Türkiye).
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Gurbuz, E.C., Tuncer, I. Latent Comparative Advantages of the Turkish Economy: Evidence from the GIFF Application. Atl Econ J 51, 169–188 (2023). https://doi.org/10.1007/s11293-023-09772-x
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DOI: https://doi.org/10.1007/s11293-023-09772-x
Keywords
- Turkish Economy
- New Structural Economics
- Growth Identification and Facilitation Framework
- Latent Comparative Advantage
- Product Space Methodology