Export Concentration and Economic Complexity in Türkiye and Mexico

Summary

We integrate our findings in export concentration, value added in exports, and economic complexity for Türkiye and Mexico. While both countries have increased their complexity through time, targeted fiscal incentives directed towards competitive industries may help attain more complex products in exports.

Key points

• Key points:
• Our calculations for export concentration in destination and product dimensions show diverging paths for Türkiye and Mexico: Mexico has steadily increased its export concentration both on geographical and product terms, whereas Turkish exports have become more diversified.
• Türkiye portrays a more balanced position regarding forward (outstanding domestic input) and backward linkages (prominent foreign input) in global value chains. In contrast, the backward linkage in Mexico's exports exceeds the forward linkage more than four times.
• The Product Spaces of the two countries, generated with the economic complexity methodology, reveal that Mexico's exports are concentrated on products with relatively higher complexity scores, while Türkiye's export composition is more scattered on the product space, exhibiting concentration in low-complexity products, especially in the textile and agriculture sectors.
• Higher export concentration is associated with lower economic complexity scores in the case of Türkiye, which becomes more substantial in the "destination" dimension of export concentration. In the case of product concentration, the relationship between concentration and complexity is looser for both countries.
• Regarding fiscal incentive schemes supporting businesses, Mexico's tax incentive programs focus on high-complexity products in the chemicals and machinery sectors with revealed comparative advantage. Even though Türkiye's policy incentives are more concentrated on products with lower complexity gain, there has recently been a higher focus on regional investment incentive schemes and products in metalworking and electrical machinery with higher complexity scores.

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