The effect of technological innovation on economic growth and export: The case of Turkey-EU (15) countries

The purpose of the thesis is to test the hypothesis of technological innovation has a positive substantial effect on economic growth and exports by employing relevant data for Turkey and its main trading partners, EU-15 countries, for the period of 1998-2013. For measuring technological innovation capacity, an index was constructed by benefiting from related international literature. Turkey's export to EU-15 countries was decomposed into the extensive and intensive components. A Panel ARDL model (Autoregressive Distributed Lag Model) was estimated for the relationship between technological innovation and economic growth and decomposed exports by employing PMG (Pooled Mean Group Estimator). It has been determined that the effect of technological innovation on economic growth is positive and statistically significant. When the country-based estimation results are evaluated for Turkey, no strong support was observed for the relationship between technological innovation and economic growth. This result was attributed to the fact that Turkey's export was dominated by low-tech innovation-based products. On the other hand, it was found that there is no significant relationship between technological innovation and extensive exports while a positive significant relationship was detected in the case of intensive exports. For a sustained economic growth and export increase, Turkey has to shift its export structure from low-tech to high-tech innovation based products. This needs the implementation of a series of comprehensive economic and social reforms.