A comparison of economic complexity in Türkiye and OECD countries: new data based on industrial products

Abstract

Purpose

This study aims to analyse Türkiye’s industrial economic complexity index (ECI-IND) for comparison with the ECI-INDs of member countries of the Organization for Economic Co-operation and Development (OECD). It also explores the causal relationship between economic complexity and economic growth in Türkiye.

Design/methodology/approach

Empirical analysis was directed at industrial export baskets consisting of 760 product groups distributed by 130 countries. These data were used to calculate the product complexity index (PCI) and ECI-IND values of these countries. The calculations then served as the basis for examining Türkiye’s economic complexity in comparison with that of OECD countries. Finally, the short- and long-term relationships between the ECI-IND and GDP per capita in Türkiye were investigated using a time series analysis.

Findings

This study’s findings revealed that Türkiye ranked last in terms of economic complexity. The time series analysis showed unidirectional causality between Türkiye’s ECI-IND and its economic growth.

Practical implications

Türkiye should concentrate on ensuring the convergence of its ECI with those of developed countries. Based on the existing literature, it is important for Türkiye to implement policies that (1) increase human capital, (2) expand the share of R&D expenditures out of the GDP and (3) attract foreign direct investments, which advance technology transfer.

Originality/value

This study inquired into the ECI based on industrial products in Türkiye and accordingly provided new data on countries. It also compared Türkiye and OECD nations with respect to this index.