Developing countries, industrialization and export: Comparison of Turkey with selected countries

The primary purpose of this study is to determine how much of selected Asian countries' and Turkey's exports is really made in these countries measuring sectoral vertical specialization and domestic value-added from harmonized international input-output table data. Second objective is to present changing patterns of international trade in both developed and developing countries, together with the responses of evolving trade theories and their analysis tools to these changes. Third objective is to find out some possible explanatory answers to what East Asian countries did different for the exceptional export-led industrialization paths (Asian miracle). Fourth objective is to investigate Turkey's export-oriented industrialization process with demonstrations of export developments and structural transformation. The last objective is to compare export performances of these countries multidimensionally, using the traditional and new analysis methods. By doing so, China and Asia effects are also examined. The global and country-specific outlooks of various sectoral and aggregated data and main findings from different analysis techniques can be summarized as follows: i) Export-oriented industrialization model is fundamental of economic development. ii) After substantial reductions in developing countries' trade barriers, their participations in international trading system have rapidly grown over the past two decades. iii) Both demand and supply side factors are important determinants of high export performance. iv) Global value chains have formed inter-sectoral and cross-border production networks, in which, numerous countries have been manufacturing with an international division of labor. This trade in tasks also implies mutual complementarity besides rising competitive pressures. v) Industrialization is principally a process of structural transformations and upgrades in production, export and employment. This requires 'acquired' competitive advantages rather than 'natural' comparative advantages, as East Asian countries carried out. vi) After a long neglect, industrial policies have become fashionable with the rising consensus that government interventions contributed to East Asian miracle. However, the applicability and success of especially excessive regulations are still controversial for other developing countries. vii) Foreign contents and value-added shares of production and export have rapidly increased since the 1990s in most global value chains. In this process, global trade in intermediate goods has grown much faster than in final goods. viii) What countries produce and export matter. In practice, the fact that countries producing and exporting more sophisticated components have more sustainable performance, confirms the importance of innovation. ix) Turkey has not only experienced a boom in its gross export but also increased its global export share in medium-level technological manufactures mainly like machinery and motor vehicles, while reducing that of traditional agriculture and labor intensive goods such as food and textile over time since the early-2000s. This transformation, for now, can be seemingly explained by developed countries' deindustrialization processes and sliding their production stages to the developing countries to benefit locational advantages. x) Because of multiple counting, caused by export and re-export of intermediate goods, standard gross trade statistics are unable to capture countries' net value-added and gains in their trades. Furthermore, the use of the intra-industry trade calculated taking into account only final goods and vertical specialization including just import content of export (excluding export content of import) are also limited. Therefore, measuring countries' trade in value added is for now seen the most appropriate method. xi) Turkey's import content of gross export is about 17 percent; the share of input import in total input demand is about 16 percent in 2002 and foreign value-added share of gross export is about 22 percent in 2009. xii) In 2009, domestic value-added shares of manufacturing industry for Turkey, South Korea, India and China are 74, 64, 76 and 74 percent and the rates of total value-added imports covered by total value-added exports are 79, 69, 67 and 51 percent, respectively. The latter values indicate that these countries are net value-added importers in their trades. South Korea (470 percent) has the highest ratio in transport equipment while Turkey (336 percent), India (226 percent) ve China (316 percent) have in textiles, leather and footwear products.