Structural changes in exports of an emerging economy: Case of Turkey

This paper indicates that Turkish exports are subject to structural changes as Turkey integrates into global production networks. Integration, which leads vertical specialization in production and changes in the commodity composition of Turkish exports in favor of non-traditional commodities, paces up during economic reform periods. As the export shares of non-traditional commodities, which have higher import and income sensitivity but lower real exchange rate elasticity, increases, coefficients of the aggregate export function change accordingly. Nevertheless, high import and income elasticity of exports imply that the global growth pattern plays a significant role in determining exports of Turkey.

► We examine aggregate and commodity based export demand and supply dynamics of Turkey. ► We showed that there are continuous alterations in the export functions of Turkey due to changes in the parameters of the models. ► We observed increase in the income and intermediate goods imports but decrease in exchange rate elasticity of exports. ► Changes in the composition of exports in favor of non-traditional commodities that are more fit to global value chains have been driving the structural change process.