An Empirical Analysis of Product Concentration and Income in High-Technology ExportsDevran Şanlı, Aziz Konukman
Concentration on exports is important in terms of the contribution of exports to sustainable economic growth and income level. Therefore, literature researching the relationship between export concentration and income has emerged. However, the relationship in question has not yet been extensively analyzed concerning high-technology exports. The current study investigates the product concentration/diversification at the high-technology level, which has made it a pioneering study and the validity of the resource curse hypothesis for the high-technology sector. The findings obtained by panel data econometrics in a sample from 1988 to 2017 in 49 countries show that the U-shaped relationship put forward for general exports does not apply to high-technology (HT) exports. There is no diversification curve between HT-export concentration and income. However,the driver of diversification in HT exports has been found to be income level. Asincome levelsincrease, countries can diversify HT products. Besides, natural resource wealth is not a hindrance to the diversification of HT exports; instead, it contributes to diversification. This finding suggests that resource abundance does not exclude technological progress and knowledge economy activities. As control variables, country scale and trade volume indicators contribute positively to HT concentration. This result contradicts the literature put forward on general export.
Yüksek Teknoloji İhracatında Ürün Yoğunlaşması ve Gelir Üzerine Ampirik Bir AnalizDevran Şanlı, Aziz Konukman
İhracatta yoğunlaşma, ihracatın gelir ve büyümeye verdiği katkı ve bu durumun sürdürülebilirliği açısından önemlidir. Buradan hareketle ihracatta yoğunlaşma-gelir ilişkisini araştıran bir literatür doğmuştur. Ancak söz konusu ilişki teknoloji düzeylerine göre henüz kapsamlı biçimde analiz edilmemiştir. Mevcut çalışma bu noktadaki boşluğu yüksek teknoloji seviyesinde doldurmayı hedeflemektedir. Bu yönüyle literatürde öncül bir çalışma olacaktır. Bununla birlikte yine ilk kez bu çalışmada kaynak laneti hipotezinin yüksek teknoloji sektörü için geçerliliği sınanmaktadır. 1988-2017 ve 49 ülke örnekleminde panel veri ekonometrisiyle elde edilen bulgular, İhracatın geneli için ileri sürülen U-biçimli ilişkinin yüksek teknoloji(HT) sektörü için geçerli olmadığı göstermektedir. HT ihracatı yoğunlaşması ve gelir arasında çeşitlenme eğrisinin varlığından söz edilemez. Ancak, HT ihracatında çeşitlenmenin itici gücünün, gelir düzeyi olduğu tespit edilmiştir. Gelir düzeyi arttıkça ülkeler HT ürünlerini çeşitlendirebilmektedir. Bununla birlikte, doğal kaynak zenginliği HT ihracatının çeşitlenmesinde engelleyici bir unsur olmamakta aksine çeşitlenmeye katkı sağlamaktadır. Bu bulgu, kaynak bolluğunun teknolojik ilerleme ve bilgi ekonomisi faaliyetlerini dışlamadığını göstermektedir. Kontrol değişkenleri olarak ülke ölçeği ve ticaret hacmi göstergeleri ise yoğunlaşmaya pozitif katkı vermektedir. Bu sonuç da ihracatın geneli için ileri sürülen literatürün aksine bir bulgudur.
This study explores the relationship between HT concentration and income and the validity of the diversification curve. The validity of the resource curse hypothesis for the HT sector is tested. The effect of the country scale and trade volume on concentration in the HT sector is also examined.
This research uses empirical methods to analyze the relationship between HT-export concentration and income. Concentration coefficients in the HT sector were calculated using three different indices: the Herfindahl-Hirschman Index (HHI), the Gini-Hirschman Index (GHI), and Entropy Index (EI). These indices, which are used to measure the concentration of variables in various subjects in different disciplines, are generally used in the field of economics to measure firm concentration in the markets and geographical concentration in foreign trade. An increase in index values indicates diversification, and a decrease indicates concentration. In the entropy index, the increase indicates diversification, unlike other indices.
These data were used in regression analysis as a dependent variable at the next stage. Variables used in the study were obtained from the World Integrated Trade Solutions (WITS), World Bank (WB), OECD, and United Nations Conference on Trade and Development (UNCTAD) databases in a sample covering the period 1988- 2017 in 49 countries. The countries included in the sample were predominantly OECD economies. It was found that linear SEK assumptions could not be met in the tests of autocorrelation, heteroskedasticity, and cross-section dependence on panel regression residuals. In consideration of these problems, regression with DriscollKraay (1998) standard errors gives robust results. The F values obtained from the estimates show that the models are generally significant. The stationary regression residuals eliminate the possibility of spurious regression and indicates that the series are cointegrated. The variance inflation factor was calculated to be more diminutive than the critical threshold value (Mean VIF = 2.14 < 10), showing no multicollinearity between variables. Because the variables are used in logarithmic form, the estimated coefficients can be interpreted directly as elasticity.
The findings obtained by panel data econometrics in a sample from 1988 to 2017 in 49 countries show that the U-shaped relationship put forward for general export does not apply to HT export. There is no concentration or diversification curve for HT exports. However, the driver of HT-export diversification has been found to be income level. As income levels increase, countries can diversify HT products. A linear and negative relationship was found between export concentrations and income in the HT sector. When the income increases by 1%, the HT-export concentration decreases by approximately 0.14 units compared to the HHI index. In other words, diversity increases.
Natural resource wealth is not a hindrance to HT-export diversification, but rather contributes to diversification. This finding suggests that resource abundance does not exclude technological progress and knowledge economy activities. As control variables, country scale and trade volume indicators contribute positively to HT concentration. A 1% increase in the population increases HT-export concentration to 0.47 units according to the HHI index; the increase in openness increases by 0.25 units. In addition, when the interval estimates are examined together with the point estimates, the coefficient signs do not change. This result contradicts the literature put forward for general export. In the rankings of all indices, South Africa, Italy, the United States, Austria, and Germany appear as the countries with the lowest degrees of concentration.
The possibilities and limitations of this study fall within the framework of panel data econometrics assumptions. However, the accuracy of the data obtained from the databases constitutes another constraint. The findings are at the country level and do not contain information on sectors and regions.
Policy makers aiming at product diversification in the HT industry must first design policies that target and promote income levels. To achieve income growth, the macroeconomic environment such as investment and savings levels, institutional and legal structure, as well as primary production factors (human and physical capital, R&D stock) put forward by growth models must be convenient. Where the resource curse hypothesis is valid, where knowledge economies and technology-intensive activities are restricted and production structure and trade are concentrated in primary goods (natural resources), countries should focus on institutional structure reforms necessary to overcome the vicious cycle. Good management of natural resources and corporate structure will increase the diversification in HT exports.
The relationship between HT-export concentration and income has not yet been extensively analyzed according to the level of technology. The present study aims to remark on this point. This aspect makes it will be a pioneering study in the literature. Also, this is the initial study in the literature that tests the validity of the resource curse hypothesis for the HT sector.