A view of foreign trade theories from industry 4.0: An econometric analysis for Turkey

Foreign trade theories, while explaining the trade of countries in their development over time, direct the industrialization policies according to the current conditions in line with the expectations of the national and international market and consumer preferences. Foreign trade theories; From the classical to the modern, and today, as a result of technological progress and developments, it is seen that there is a process towards competition-oriented foreign trade theories. In this study, the relationship between industrialization, real income, technology and foreign trade in the 1984-2020 period in Turkey was investigated by econometric methods. In the context, FMOLS estimator was used for long-term estimations and Granger causality test was used for the causality relationship between the series. A positive and statistically significant relationship was found between income and foreign trade in FMOLS test results. However, the effect of industrialization on foreign trade is negative and statistically significant. In the Granger causality test results, a bidirectional causality relationship between trade openness and patent applications and a bidirectional causality relationship between trade openness and income was determined. In this study, the relationship between foreign trade, real income and industrialization has been examined. In line with the results of the study, it is necessary to rapidly adopt Industry 4.0 and its application components as strategic policy targets in order to increase the stable and strong economy, global competitiveness and productivity, and to develop the sustainable growth and development goals of the countries. When we look at the industrialization processes in the light of industrial revolutions, it is moving towards competition-oriented industrialization policies, as experienced in foreign trade theories. At the point reached today, world economies should prepare their strategic plans and programs with competitive practices in industrial and foreign trade policies at the point of advanced technology, digitalization, and production of new and competitive quality products. KEYWORDS Trade Openness, Real Income, Industrialization, Patent, Turkiye