Global Value Chains and Export Growth in Türkiye

Abstract

With its emphasis on expanding its role in the global value chain and growing exports, Türkiye has taken important steps towards economic growth. Along the way, Türkiye has recognized that the products it exports need to create more economic value and has faced a number of challenges in this regard. This study examines Türkiye's adaptation to the global value chain and how this adaptation has contributed to the Turkish export growth. Applying the Vector Autoregressive (VAR) Modelling technique and time series data from 1990 to 2018, the study finds that the participation in the global value chain has a positive impact on Türkiye’s export growth in the long run, but in the short run, it can increase its external dependence and create trade imbalances. Moreover, the results show that growth in exports leads to economic growth, and there is a bidirectional causality relationship between the two.  Apart from this, innovation, R&D and technology investments through foreign direct investment are seen to strengthen the alignment with the global value chain and support export growth. Based on thses findings, the study concludes that the Turkey's adaptation to the global value chain and its export targets with high economic value can make economic growth sustainable.