Revealed Comparative Advantage of Turkey in the Automotive Network in EU-15 in the Face of Competition from China and CEEC


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Tuncer Terregrossa N. , Gönel F.

European Trade Study Group Conference, Munich, Germany, 12 - 14 September 2014, pp.1-20

  • Publication Type: Conference Paper / Full Text
  • City: Munich
  • Country: Germany
  • Page Numbers: pp.1-20

Abstract

The Turkish automotive industry exhibited a notable change in its trade performance as of 2001. The share of automobiles and parts exports in total Turkish exports, and the share of EU in Turkish exports of automobiles and parts both rose. This change is attributable to production fragmentation in the global automotive network, as well as the implementation of the provisions of EU-Turkey Customs Union Agreement. The membership of 8 Central and Eastern European Countries (EU-8) in 2004 and the further inclusion of Bulgaria, Romania, and Croatia among member states is a challenge to Turkey’s competitiveness in the automotive network in the EU-15 market. China is another source of competition in the same area who wants to be holding an important share in the European market. This paper examines Turkey’s competitiveness in the automotive network in the EU-15 market. We measure Revealed Comparative Advantage (RCA) by indices developed by Vollrath (1991). We make the necessary adjustments to the indices so that they reveal competitiveness in a single sector. The indices are constructed for the case of different country’s firms competing in the same export market. We calculate RCA indices for the automotive network by making use of trade data compiled according to the Harmonized System (HS) at the 6-digit level. The indices account for both exports and imports. The study encompasses all the 6-digit automotive products and parts that are listed under the 4-digit HS codes 87.01-87.08. The period of analysis covers the years from 2001 to 2013. We calculate the RCA indices for Turkey, CEECs and China and normalize them for international comparison.