Türkiye | Positioning of the country in Global Value Chains (GVCs)

Summary

Türkiye is integrated along the GVCs with strong backward and forward linkages, while searching for new opportunities in international trade. We devise an export diversification strategy to detect products and sectors that could be attained with Türkiye’s know-how and provide higher value added in trade.

Key points

• Key points:
• The sectoral composition of domestic and foreign value added show that services sectors tend to have relatively higher domestic value added, while foreign value added seem to be more concentrated in manufacturing related sectors.
• While the average international length of Türkiye across industries is increasing over time, it is shorter than average global international length, which points that Türkiye has the room to improve its global integration in its production.
• Our adjusted RCA scores assessing the competitiveness of Türkiye’s domestic value added in exports reveal that Türkiye’s top 3 competitive exports are in construction, textile and air transport sectors.
• Türkiye lags behind many high-income countries in terms of export sophistication, despite having a more sophisticated export composition compared to the countries with the same level of income.
• Although Türkiye is currently specialized in lower complexity products, it has a high potential to improve its complexity outlook, being near to many complex products in terms of its capabilities. To assign a strategy, we propose different paths with differing time horizons: 1) “Easier to go” targeting products nearer to our current capabilities, 2) “interim advantage” guaranteeing rapid revenue gains from high income countries, and consequently 3) “long term gains” enhancing complexity with needed costly investment.

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