Outward processing trade consists of a temporary transaction implying the shifting of a production phase of the contractors manufacturing activities to a foreign subcontractor. Therefore outward processing trade concerns goods whose production can be split into different phases that can be performed in different locations. Foreign outsourcing also involves the relocation of some domestic production of goods or services to foreign countries. Increased outsourcing activity is expected to increase the trade in intermediate goods. The share of parts and components in total exports can be used as an indicator for foreign outsourcing. Foreign outsourcing includes not only processing goods but services, and the trade statistics in this sense, cannot give the full picture of the production sharing. However, trade statistics are able to separate the outsourcing activity by countries or regions. In this paper Turkeys foreign trade in parts and components is analyzed by region (EU-15) and countries such as USA and Rep. of China for the years 1985 and 2005. The calculations are based upon SITC Revision 2. Outside the machinery and transport equipment group, SITC Rev.2 fails to differentiate sufficiently between assembled goods and components and this will result in underestimation of the level of international production sharing. However, the items under SITC 7 constitute 59% of the world trade in manufactures and around 50% of Turkish imports in manufactures. So, the data from SITC Rev. 2 are to show an incomplete but true picture of foreign outsourcing in Turkish manufactures. We have found out an increasing outsourcing activity from 1985 to 2005. The items 764, 772 and 784 in SITC Rev. 2 show a remarkable increase. These items belong to parts of telecommunications equipment (764), parts of switchgear (772) and parts of motor vehicles and accessories (784). The increase seems quite stable between Turkey and EU-15, and also not very important in respect to the trade between Turkey and USA. On the other hand trade in parts and components between China and Turkey shows a remarkable increase implying a growing outsourcing activity towards China.
Key words: Outsourcing, Outward Processing Trade, Turkish Foreign Trade in Parts and Components Article Language: EnglishTurkish
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