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The Impacts of Openness and Global Value Chains on the Performance of Turkish Sectors

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  • Halit Yanıkkaya
  • Abdullah Altun
  • Pınar Tat

Abstract

Regarding the dynamics of the contemporary world economy, success in a domestic economy cannot be achieved without effective integration policies for goods/services and capital flows. To evaluate this proposition, we utilize many openness measures for two periods, 1995–2009 and 2000–2014, for the Turkish sectors. The empirical findings suggest that domestic value added in export is a major driver of sectoral value added. While import and backward linkages appear to be stimulators for total factor productivity (TFP) in manufacturing industries, they have no significant impact on sectoral value added. Trade barriers in the form of tariff rates, which primarily stemmed from manufacturing industries, have a considerable detrimental impact on Turkish sectoral performance. Higher tariffs not only make it more difficult for Turkish businesses to enter overseas markets but also raise the costs for importers. The initial impact of this protection is inexorably exacerbated by global value chains (GVCs), with negative consequences felt in nearly every economy. Given the increased backward GVC involvement of some manufacturing industries, such as machinery and equipment, Turkish sectors should be prepared for external shocks by diversifying importer origins, stocking up, and boosting transparency in their operations. Overall, designing and implementing trade policies to effectively integrate into the GVCs is an important task for Turkey. Keywords: Openness, Sectoral total factor productivity, Value added, GVC participation, Turkey. JEL: F14, F21, O14, O24, O47

Suggested Citation

  • Halit Yanıkkaya & Abdullah Altun & Pınar Tat, 2024. "The Impacts of Openness and Global Value Chains on the Performance of Turkish Sectors," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 71(2), pages 265-293.
    • Handle: RePEc:voj:journl:v:71:y:2024:i:2:p:265-293:id:1323
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    Cited by:

    1. Fišera, Boris & Horváth, Roman, 2022. "Are exchange rates less important for trade in a more globalized world? Evidence for the new EU members," Economic Systems, Elsevier, vol. 46(1).
    2. Iliopoulos, Panagiotis (Takis), 2022. "A quantitative analysis of governance structures in the world economy," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 599(C).
    3. Wannaphong Durongkaveroj, 2023. "Emphasis on domestic value added in export in the era of global value chain: evidence from Thailand," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 50(3), pages 703-729, September.
    4. Halit Yanikkaya & Abdullah Altun & Pınar Tat, 2022. "Does the Complexity of GVC Participation Matter for Productivity and Output Growth?," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 34(4), pages 2038-2068, August.

    More about this item

    Keywords

    openness; sectoral total factor productivity; value added; GVC participation; Turkey;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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