The analysis of international competition and specialization of Turkey and South Korea on the basis of value added

In this research, it is aimed to measure and compare with Turkey and South Korea's foreign trade competitiveness and specialization levels on sectoral basis. In this context, in order to reveal the global competition and specialization levels of these countries the SITC and the ISIC which are supportive product technology classifications of each other have been used. It has been aimed to reveal the comparative advantages and disadvantages of countries on the basis of factor endowment (labor, raw material, capital, R&D) with the SITC. Also with the ISIC, it has been aimed to calculate the technology levels in the endowment of the products that countries have competitive advantage. Both classifications will ultimately try to identify in which industries and product groups the countries have created more value added and having competitive power. In the study, both in the SITC and the ISIC classificiations, in order to measure Turkey and South Korea's micro base (sectoral) competition structure and specialization level, different from each other but supportive indices are used. In this perspective, it has been possible to measure the sectoral competition and specialization levels of the countries with the help of Lafay index, Michaely index, RCA Coefficient measuring Contribution to the Trade Balance and Trade Complementarity index. The analyses made under the SITC classification shows that Turkey has a competitive advantage in the exports of mainly labor and capital intensive product groups. Turkey's export competitiveness takes place especially in labor intensive product groups axis. There is no high added value in labor-intensive products in which Turkey has competitive advantage. It emerges that Turkey has no competitive advantage in the products or product groups which has higher profit margin but need more R&D investment. On the other hand, South Korea has mainly specialized in the export of relatively higher competitive, R&D based, and capital intensive products and provided competitive advantage. In this way, global competitiveness of South Korea in high value added product groups has been increasing over the years. The analyses made within the scope of the ISIC classification also support the SITC analyses. Likewise, Turkey has been specialized the export of low and low-medium product groups. As for, South Korea has been specialized the technology groups that are relatively higher innovation and R&D level. When the analysis results are evaluated, the differences in Turkey and South Korea's exports of value added endowment emerges markedly. South Korea, in comparison with Turkey, has been specialized in industries with relatively higher value-added products and achieved competitive power. Therefore, South Korea has a relatively high-tech production and export endowment as against Turkey.