Export product diversity and economic growth: Panel data analysis on transition economies

With the disintegration of the USSR, Yugoslavia and Czechoslovakia in 1991, the countries that gained their economic and political independence in Europe and Asia were named as "Transition Economies". Transition countries, on the one hand, had a transformation from authoritarian to democratic regimes; and economically, they experienced a transformation from control systems to market economy. Therefore, the main purpose of this study is to investigate the export diversity and growth relations in the Transition Economies, which constitute a special group of countries. For this purpose, Westerlund cointegration tests, Pesaran CCE tests and Emirmahmutoğlu-Köse panel causality tests were applied considering the years 1995-2020. In addition, in the study, the transition economies were divided into groups and the empirical results were given separately on the basis of both country groups and countries. According to the results obtained from the Westerlund cointegration test, long-term and statistically significant relationships were found between product diversity and economic growth in exports in all transition economy groups. According to Pesaran CEE cointegration test results, product diversity in exports in transition economies which are members to the European Union affects growth in a meaningful and positive way. In other transition countries, on the other hand, the effects of export diversification on economic growth are consistent with theory but not statistically significant. When the data were analyzed with the Emirmahmutoğlu-Köse panel causality tests, a one-way causality relationship was found from product diversity to economic growth in exports in the transition economies of the European Union, while no significant relationship was found between the variables in other transition economies. As a result, it is important to provide an export structure with high added value and based on technological products in order to ensure stable economic growth and increase the country's economic resilience against external shocks.