The relationship between comparative advantage and economic growth in high and medium technology export products: The case of Turkey

Competitiveness is the ability of countries to increase the welfare of their citizens while providing them with the desired goods and services. As can be understood from the definition, competitiveness is a concept that can be directly related to economic growth. Another concept associated with competitiveness is high-tech products. Since these products have high added value, having competitiveness in these products brings along high economic growth. This study aimed to analyze the relationship between economic growth and Turkey's competitiveness in the high and medium technology products. For this purpose, with the help of Balassa's Comparative Advantage Index between 1989-2017, the competitiveness of high and medium technology products of Turkish manufacturing industry was calculated and its effect on economic growth was tried to be determined by time series analysis. Stability of the series by unit root test and long-term relationship of the series were tried to be determined by Johansen cointegration test. Finally, the vector error correction model was applied to reveal the dynamics between short and long term in the co-integrated series. The result of this study has shown that Turkey has comperative advantage for mid-tech products, but it have a competitive disadvantage in high-tech products. According to the models of study, increasing in the competitiveness index values of high and medium technology products will cause a rise in economic growth. Key Words: Competitiveness, Economic growth, High-Technology, Revealed Comperative Advantage