Has the Industrial Sector Lost Its Importance? An Examination of Exports and Competitiveness
Hüseyin Karagöz, Sefer ŞenerThis study examines the effects that the industrial sector, whose share in the economies of countries gradually decreasing, and the innovation that has come to the fore under the competitive conditions of today have on exports and competitiveness. The study covers the 2008-2017 period for 35 OECD countries and has preferred data on the value the manufacturing industry adds for the industry sector and data on R&D expenditures in regard to innovation. The results obtained from the applied panel data analysis method show the increase in the manufacturing industry to have positively affected competitiveness and goods exports and the increase in R&D expenditures to have positively affected competitiveness, goods exports, and high technology exports. As a result, the study concludes the manufacturing industry as the most important branch of the industrial sector to have an important role in the development of competitiveness and exports that bring sustainability to economic growth, with innovation-oriented initiatives suchas R&D activities in this sector also significantly increasing this effect.
Sanayi Sektörü Önemini Yitirdi mi? İhracat ve Rekabet Gücü Ekseninde Bir İnceleme
Hüseyin Karagöz, Sefer ŞenerBu çalışmada, ülke ekonomilerindeki payı giderek azalan sanayi sektörünün ve günümüz rekabet koşularında ön plana çıkan inovasyonun ihracat ve rekabet gücü üzerindeki etkileri incelenmiştir. 35 OECD ülkesinin 2008-2017 dönemini kapsayan çalışmada, sanayi sektörü için imalat sanayi katma değeri, inovasyon için ise Ar-Ge harcamalarına ilişkin veriler tercih edilmiştir. Uygulanan panel veri analizi yönteminden elde edilen sonuçlar, imalat sanayindeki artışın rekabet gücü ve mal ihracatı üzerinde, Ar-Ge harcamalarındaki artışın ise rekabet gücü, mal ihracatı ve yüksek teknoloji ihracatı üzerinde pozitif yönlü etkiler yarattığını göstermiştir. Dolayısıyla, sanayi sektörünün en önemli kolunu oluşturan imalat sanayinin, ekonomik büyümeye sürdürülebilirlik kazandıran rekabet gücü ve ihracatın geliştirilmesinde önemli bir role sahip olduğu, söz konusu sektörde Ar-Ge faaliyetleri gibi inovasyonayönelik girişimlerin bu etkiyi önemli oranda artırdığı sonucuna ulaşılmıştır.
With globalization, the reduced limitations in the circulation of goods and capital has led production to shift to developing countries. This has made significant contributions to developing the production capabilities and growth performance in these countries. This development generally includes laborintensive sectors based on technology transfer but has lost momentum over time, with a significant decline occurring regarding growth performance, especially after the Global Crisis and the contraction in global demand. Meanwhile, developed countries’ strategies have generally focused on critical goods and components that explore innovations through R&D and design studies and contain high technology. These countries have gradually withdrawn from the manufacturing industry, especially from labor-intensive sectors, and increased the importance their services sector have in the economy.
Due to the service sector in developed countries that have reached advanced levels of industrialization becoming more prominent, the views in the literature that associate economic success with industrialization and that argue the manufacturing industry to be the best path for economic development have gradually weakened. Moreover, a similar trend has begun to occur in developing countries where industrialization has not yet fully matured. This situation has caused debates regarding the service sector’s contribution to welfare and growth in developed countries, as well as to development in developing countries. Therefore, the industrial sector’s loss of importance in the economies of developed and developing countries has created the impression that this sector, which has carried developed countries to their current levels, is not considered as significant as it used to be.
Studies in the literature can approach sectoral changes regarding economic structure from different perspectives. Contrary to the view that the services sector is unable to increase productivity and welfare as much as the industrial sector and that growth will slow down in economies as a result of the services sector’s dominance, some opinions argue the relationship between these sectors to be getting stronger, with the services sector therefore now able to create as much welfare as the industrial sector. When considering the complementary roles these sectors have, the industrial sector’s level of development can also be said to determine the quality of the services sector. Therefore, the services sector in developed countries has been argued to operate in more productive areas, whereas the services sector in developing countries operates in areas with lower productivity. This situation raises the question of how development can be possible in developing countries, as well as how the economic performance of developed countries is affected.
This study uses the panel data analysis method to examine the effects the industrial sector and innovation capabilities have on export and competitiveness, which are extremely important in terms of development and sustainable growth. In this context, the study has determined the independent variables to be the added value created in the manufacturing industry, which is the most important branch of the industrial sector, and the expenditures that are made for R&D activities, which form the basis of innovation. Meanwhile, the study takes the Global Competitiveness Index into consideration as the dependent variable for competitiveness and the ratio of exports of goods and high technology exports in exports as the dependent variables for exports. The study covers 35 OECDcountries and limits itself to the 2008-2017 period in order to obtain data on hightechnology exports while avoiding the effects from the methodological changes that have occurred for measuring competitiveness. The performed analyses have determined the value-added growth rate, which expresses development in the manufacturing industry, to positively affect competitiveness and goods exports. In addition, R&D expenditures have been observed to be better determinants of the dependent variables and to positively affect competitiveness, goods exports, and high technology exports. According to the results, a one-unit increase in the manufacturing industry value-added growth rate increases the Global Competitiveness Index by 0.0033 units, while a one-unit increase in the GDP ratio of R&D expenditures increases competitiveness by 0.0926 units. While a one-unit increase in the value-added growth rate increases goods exports by 1.587 units, a one-unit increase in the ratio of R&D expenditures to GDP increases goods export by 36.3 units. However, while statistically significant results could not be reached regarding the effects of the manufacturing industry’s added value on high technology exports, a one-unit increase in the ratio of R&D expenditures to GDP has been concluded to increase the rate of high technology exports by 2.9 units.
These results show that the manufacturing industry plays an important role in increasing exports and competitiveness, and this role increases significantly when focusing on innovation. Competitiveness and exports make significant contributions to growth performance and sustainability, as they indicate an increase in the quality of the economy and in production. Therefore, focusing on increasing innovation capabilities, especially R&D activities, by focusing on the industrial sector in the economy is seen to be able to make a significant contribution to growth in developed countries and development in developing countries.
