THE ANALYSIS OF THE INTERRELATIONS BETWEEN ECONOMIC COMPLEXITY INDEX, INCOME AND HIGH-TECH EXPORTS: EVIDENCE FROM TURKEY

Abstract

The economic complexity index shows the diversity of information in the economy. High-tech products are a profitable export item and increase the country’s income. Therefore, it is expected that there will be mutual relations among economic complexity, income and high-tech exports. This study analyzes the mentioned relations for Turkey by vector autoregression (VAR) model using annual data covering 1989-2017 period. The impulse-response functions show that variables are most affected by themselves. Except themselves, the economic complexity index and high-tech exports are most affected by income, and income is most affected by the economic complexity index. Variance decomposition results also indicate that the changes in the variables are mostly explained by themselves. Except themselves, the changes in economic complexity index and high-tech exports are mostly explained by income, and income is mostly explained by economic complexity index. Lastly, Toda-Yamamoto causality test results indicate only that income causes high-tech export.