Factors determining international competitiveness: Panel data analysis for OECD countries

Since the 1950s, the liberalization international trade and the deepening of globalization have increased the intensity of international competition. While globalization has caused countries to converge in many areas such as social, cultural, economic and political etc., demand structures of countries have begun to resemble each other. Countries have started producing similar products in line with similar demand structures to meet the demands of the international market and to obtain more shares from foreign trade. Under these conditions, a country should increase its international competitiveness against its competitors, produce higher-quality, more affordable foreign-trade goods and offer them to international markets cheaper than other countries. As a result, countries need to monitor changes in the global demand structure and analyse their export structures well in order to increase their international competitiveness. From this perspective, the aim of study is to examine the factors that determine the international competitiveness. For this purpose, it can be stated that the study was conducted in two stages. In the first point, OECD countries' export competitiveness was evaluated on the basis of technology intensities using the Explanatory Comparative Advantages Index. The export structure of the countries and the level of international competitiveness are therefore revealed. In the second phase, the panel data analysis analysed the factors that determine competitiveness in international markets (GDP, exchange rate, openness, FDI, capital stock, human capital, patents). Analyses were conducted for 18 OECD countries with data for the period 1994-2017. In the econometric analysis, the coefficient values obtained with the BATTERY index, which shows the level of competitiveness of the countries at the previous stage, were considered as an indicator of international competitiveness. Econometric applications began with a horizontal cross-section dependency and a homogeneous heterogeneity test of the models, followed by an AMG coefficient estimation method and a panel causality test. According to the results obtained, it was observed that the macroeconomic indicators discussed had significant effects on international competitiveness.