Foreign demand indicator is one of the most significant determinants of export growth. European Union (EU)s growth performance had been seen as the determiner of the foreign demand indicator for Turkish exporters, because, EU has a significant share in Turkeys export market composition. Despite that, Turkeys export market composition had significantly changed, especially in 2000s. In this study, we aim to figure out the effects of market composition change to the foreign demand conditions. For this purpose we generated a foreign income growth index, weighted by the export market share in total exports of Turkey. Then we decomposed the weighted foreign income growth index to composition and country effects, by using share analysis. Within this context, 2004-2012 period is separated into two sub periods to compare the global financial crisis impacts on composition and country effects. According to our results, in Turkey, country effect is the driving force of foreign demand growth in ordinary times; while in crisis periods composition effects relative importance increases. It is predicted that country effect would again become the driving force of foreign demand growth in the forthcoming years. Another important highlight of this paper is that; composition effects contribution to foreign demand indicator growth is not limited with the current period. Thus, composition effect implies a structural market composition change which affects the country effect in the long run.
Key words: Export Growth, Foreign Demand Indicator, Market Composition, Market Diversification. JEL Classification: F10. Article Language: EnglishTurkish
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