Diversification of exports in terms of sector-country and factors affecting exports: An implementation upon Turkey

Turkey has set medium and long term export targets in recent years, also for achieving these targets has made the strategy and plans. To achieve these aforementioned targets, it's exports must be in a balanced and sustainable structure. In this context, it is important to investigate the sectoral export structure of Turkey. In this study it was aimed to identify diversification Turkey's sectoral exports on a country basis and the main factors affecting sectoral exports. In accordance with this purpose, in the first stage, diversification of Turkey's sectoral exports was calculated by using the Entropy Index method, in the second stage, the main factors affecting sectoral exports were determined by using the Poisson Pseudo Maximum Likelihood (PPML) method. The study covers the 2010-2019 period and 10 sector classified in SITC Rev4 Digit 1, and total exports data were gathered from Turkish Statistical Institue (TurkStat). And also the GDP of Turkey and importer countries, the distance of importing countries from Turkey, Turkey's real exchange rate index annual panel data were used in the study.According to the diversification analysis, there has been country diversification in 8 out of 10 sectors exported in recent years. This situation shows that the number of countries in the foreign market has increased in a balanced way. The PPML analysis showed that Turkey's sectoral exports are sensitive export partner's GDP and to the distance between countries, and that the effect of the real exchange rate index and Turkey's GDP varies on a sectoral basis. The results obtained especially revealed that the necessity of increasing trade with countries with potential for economic development in the region close to Turkey. As a result, in order for Turkey to demonstrate sustainable export performance and to be at the forefront of the world ranking in export volume, it must ensure market diversity and establish good economic relations with its close geography.