The Effects of Global Trade Liberalization on Export of High Value Added Products: The Case of Turkey

The trade openness is a measure of economic policies that restricts or increases trade between countries. Trade liberalization is reduction of the restrictions in terms of barriers to increase the free exchange of goods or services among countries. These barriers include tariffs such as taxes and surcharges, and non-tariff barriers such as license rules and quotas. When the current accounts in the balance of payments are taken into consideration, the main parameter is the current account deficit or the current account surplus which includes export-import difference formulated as (x-m). In the macro context, the correlation coefficient between trade liberalization process and export volume, which is the main subject of international trade, has been one of the main research topics in the academic literature. When the capital-intensive sectors and its related products of Heschker Ohlin theory are taken into account, they are the most significant income items of international trade. Therefore, trade liberalization of Turkey mostly depend on high value added product’s and it’s flexibility coefficient between two variables (HVAP and trade openness). For this reason, in order to calculate coefficient of correlation of two variables (HVAP and f trade openness) GMM method is implemented in methodology part of the research article. High value-added products (machinery, mechanical devices and instruments, nuclear reactors, other pieces) is taken from TUIK database as yearly data from 1990 to 2019. Trade openness is one of the most important indicators of trade liberalization. In this context, the findings demonstrate that if the trade liberalization (trade openness) coefficient increases, high value-added product export is positively affected. In the light of this information, policy makers should develop a plan to gain from multilateral trade liberalization policies and try to strengthen the local market by increasing productivity in terms of high value-added production.

Keywords

International Trade, Globalization, GMM Method, High Value Added Products, Heschker Ohlin Theory.