1. 1 / 38 Österreichische Nationalbank, Kassensaal Vienna, March 18, 2013 Prof. Dr. Aykut Kibritçioğlu Section for Economic Development and International Economics, Department of Economics, Faculty of Political Sciences, Ankara University, Turkey http://kibritcioglu.com/iktisat/ & kibritcioglu@ankara.edu.tr Some Observations on Trade Relations between Austria and Turkey Panel Discussion chaired by Governor Ewald Nowotny (OeNB) on: “Turkish-Austrian Economic Relations in a European and International Context”. Panelists: Murat Çetinkaya (CBRT), Ayşe Sezgin (MFA), Wolfgang Ruttenstorfer (VIG), Aykut Kibritçioğlu (AU).

2. 2 / 38 Turkey and Austria: Two Different Economies with Weak Linkages? Source: Eurostat, http://epp.eurostat.ec.europa.eu, March 5, 2013 A Comparison according to Selected Seven Indicators

3. 3 / 38 Movement of Goods, Services & Factors among Two Economies: Direct & Indirect Linkages TURKEY AUSTRIA Third Countries Trade in Goods Trade in Services Labor Movements Capital Movements Technology Transfer Trade in Goods Trade in Services Labor Movements Capital Movements Technology Transfer Trade in Goods Trade in Services Labor Movements Capital Movements Technology Transfer Joint economic activities in third countries? Trade in Goods Trade in Services Labor Movements Capital Movements Technology Transfer Trade in Goods Trade in Services Labor Movements Capital Movements Technology Transfer OECD-WTO: TiVA ? Quick Answer?

4. 4 / 38 Turkey: open to trade, but low “per capita trade” Austria: member of the “trade nations club”? Source: WTO Statistics Database (SDB), http://stat.wto.org, September 2012 Major Trade Partners of Austria (2011): EU27 Switzerland China USA Russian Federation Major Trade Partners of Turkey (2011): EU27 Russian Federation China USA Iraq Iran United Arab Emirates

5. 5 / 38 Merchandise Trade by Commodity (mln. USD at current prices, 1980 & 2011) Source: WTO Statistics Database (SDB), http://stat.wto.org, September 2012  Both Turkey and Austria increased their exports & imports to/from the rest of the world between 1980 and 2011, in terms of trade values.  Austrian shares in world exports & imports of agricultural products increased, while its share in imports of manufacturing goods decreased slightly.  Turkey’s shares in global exports & imports of both, agricultural and manufacturing commodities increased significantly.

6. 6 / 38 Turkey & Austria within the Network of Global Trade in Goods (%, World = 100, 1980 & 2011) Source: IMF eLibrary, Direction of Trade Statistics (DOTS) Database, http://elibrary-data.imf.org  Both countries’ shares in global trade in goods are, and were, limited, but Turkey increased her world share remarkably within the last three decades.

7. 7 / 38 Source: IMF eLibrary, Direction of Trade Statistics (DOTS) Database, http://elibrary-data.imf.org Turkey & Austria within the Network of Global Trade in Goods (TR X = 1.0, 1980 & 2011)  However, the relative global importance of trade between Turkey and Austria has not increased significantly.

8. 8 / 38 Country Composition of Austrian Exports (%, 1960-2011) Source: IMF eLibrary, Direction of Trade Statistics (DOTS) Database, http://elibrary-data.imf.org  Turkey is not a major target country for Austrian exporters.  Their destination is mainly (old, and now also new) EU countries. (Reporter: Austria, Exports, %)

9. 9 / 38 Country Composition of Austrian Imports (%, 1960-2011) Source: IMF eLibrary, Direction of Trade Statistics (DOTS) Database, http://elibrary-data.imf.org  Turkey is not a major source country for imported goods to Austria.  Germany & EU13 are the main exporters to Austria. After 1994, the new EU countries are gaining on importance in Austrian imports. (Reporter: Austria, Imports, %)

10. 10 / 38 Country Composition of Turkish Exports (%, 1960-2011) Source: IMF eLibrary, Direction of Trade Statistics (DOTS) Database, http://elibrary-data.imf.org  Austria is not a major target country for Turkish exporters.  Their destination is mainly EU (old, and now new) countries. (Reporter: Turkey, Exports, %)

11. 11 / 38 (Reporter: Turkey) Source: IMF eLibrary, Direction of Trade Statistics (DOTS) Database, http://elibrary-data.imf.org Changes in Country Composition of Turkish Exports (%, 1948-2011)

12. 12 / 38 Country Composition of Turkish Imports (%, 1960-2011) Source: IMF eLibrary, Direction of Trade Statistics (DOTS) Database, http://elibrary-data.imf.org  Austria is not a major source country for Turkey’s imported goods from abroad. Again, the EU27 ist the … (Reporter: Turkey, Imports, %)

13. 13 / 38 (Reporter: Turkey) Source: IMF eLibrary, Direction of Trade Statistics (DOTS) Database, http://elibrary-data.imf.org Changes in Country Composition of Turkish Imports (%, 1948-2011)

14. 14 / 38 Bilateral Relative Importance of Turkey and Austria as Trade Partners (as of annual averages, 2009-2011) Source: OECD.Stat, Dataset: “International Trade by Commodity Statistics” (SITC Rev. n 3), http://stats.oecd.org Commodity Coverage: All (Total). Country Coverage: All (243) Countries. Time Span: 2009-2011 (as annual averages).

15. 15 / 38 Commodity Composition of Austrian Exports & Imports to / from the World (%, 1988-2011)  Austria mainly exports to and imports from the world “machinery & transport equipment” and “manufactured goods”. Source: OECD.Stat, Dataset: “International Trade by Commodity Statistics” (SITC Rev. n 3), http://stats.oecd.org (Reporter: Austria, Imports, %) (Reporter: Austria, Exports, %) SITC

16. 16 / 38 Commodity Composition of Turkish Exports & Imports to / from the World (%, 1989-2011)  Turkey mainly exports “manufactured goods” and “machinery & transport equipment” to the world, while it imports mainly “machinery & transport equipment” from the world. Source: OECD.Stat, Dataset: “International Trade by Commodity Statistics” (SITC Rev. n 3), http://stats.oecd.org (Reporter: Turkey, Exports, %)(Reporter: Turkey, Imports, %) SITC

17. 17 / 38 Commodity Composition of Austrian Exports to Turkey (% & bln. USD, 1988-2011)  Austrian exports to Turkey mainly consist of “machinery and transport equipment” (SITC-7). Source: OECD.Stat, Dataset: “International Trade by Commodity Statistics” (SITC Rev. n 3), http://stats.oecd.org (Reporter: Austria, Exports, %) (Reporter: Austria, Exports, FOB, bln. USD) SITC Turkish Data

18. 18 / 38 Commodity Composition of Austrian Imports from Turkey (% & bln. US$, 1988-2011)  Austrian imports from Turkey mainly consist of “machinery and transport equipment” (SITC-7) and manufactured goods (SITC-6). Source: OECD.Stat, Dataset: “International Trade by Commodity Statistics” (SITC Rev. n 3), http://stats.oecd.org SITC (Reporter: Austria, Imports, CIF, bln. USD) (Reporter: Austria, Imports, %) Turkish Data

19. 19 / 38 Commodity Composition of Turkish Exports to Austria (% & bln. US$, 1989-2011)  Turkish data states that Turkey exports to Austria mainly SITC-7 and SITC-6 products. Source: OECD.Stat, Dataset: “International Trade by Commodity Statistics” (SITC Rev. n 3), http://stats.oecd.org (Reporter: Turkey, Exports, FOB, bln. USD) (Reporter: Turkey, Exports, %) SITC Austrian Data

20. 20 / 38 Commodity Composition of Turkish Imports from Austria (% & bln. US$, 1989-2011)  Turkish imports from Austria mainly consist of “machinery and transport equipment” (SITC-7) and manufactured goods (SITC-6). Source: OECD.Stat, Dataset: “International Trade by Commodity Statistics” (SITC Rev. n 3), http://stats.oecd.org (Reporter: Turkey, Imports, CIF, bln. USD) (Reporter: Turkey, Imports, %) SITC Austrian Data

21. 21 / 38 Commodity Structure of Turkish-Austrian Trade in Goods (%, 1989 & 2011) Source: OECD.Stat, Dataset: “International Trade by Commodity Statistics” (SITC Rev. n 3), http://stats.oecd.org Definitions for Product Groups: Primary Products: SITC = + 1 + 2 + 3 + 4 + 68 Manufactured Products: SITC 5 + 6 - 68 + 7 + 8

22. 22 / 38 “Trade Data Discrepancy” between Turkey & Austria (%, 1948-2011) Source: IMF eLibrary, Direction of Trade Statistics (DOTS) Database, http://elibrary-data.imf.org  There are huge differences between the reported Turkish exports and Austrian imports data for trade between two countries: 1961-1980, 1981-1988 & 1995-2011.  It cannot simply be explained by the “FOB/CIF factor”.  Reporting / recording errors or lags? Re-exports? Needs to be investigated in detail…

23. 23 / 38 Comparison & Development of National Trade Shares according to Turkish & Austrian Trade Data (%, 1948-2011) Source: IMF eLibrary, Direction of Trade Statistics (DOTS) Database, http://elibrary-data.imf.org

24. 24 / 38 Exports (FOB) to Imports (CIF) Ratio for Bilateral Trade between Turkey and Austria (%, 1948-2011) Source: IMF eLibrary, Direction of Trade Statistics (DOTS) Database, http://elibrary-data.imf.org

25. 25 / 38 OECD-WTO Joint Database on “Trade in Value Added” (TiVA) [ Current Coverage: 2005, 2008, 2009; Planned Coverage: since 1995 ] Linkages What is Trade in Value Added? “Trade in value-added describes a statistical approach used to estimate the source(s) of value (by country and industry) that is added in producing goods and services for export (and import). It recognises that growing global value chains mean that a country's exports increasingly rely on significant intermediate imports (and, so, value added by industries in upstream countries). For example, a motor vehicle exported by country A may require significant parts, such as engines, seats etc produced in other countries. In turn these countries will use intermediate inputs imported from other countries, such as steel, rubber etc to produce the parts exported to A. The Trade in value-added approach traces the value added by each industry and country in the production chain and allocates the value-added to these source industries and countries.” Source & More Info: http://www.oecd.org/trade/valueadded Database: http://stats.oecd.org/Index.aspx?DataSetCode=TIVA_OECD_WTO WTO’s Trade Data Day: 16 January 2013, http://www.wto.org/english/res_e/statis_e/miwi_e/tradedataday13_e/tradedataday13_e.htm

26. 26 / 38 Source: OECD.Stat, Dataset: “International Trade by Commodity Statistics” (HS 2007), http://stats.oecd.org Austria’s Top 10 Export Commodity Groups in Trade with Turkey (as annual averages, 2009-2011) Top 3 ?

27. 27 / 38 Source: OECD.Stat, Dataset: “International Trade by Commodity Statistics” (HS 2007), http://stats.oecd.org Austria’s Top Three Export Commodity Groups in Trade with Turkey (as annual averages, 2009-2011)

28. 28 / 38 Turkey’s Top 10 Export Commodity Groups in Trade with Austria (as annual averages, 2009-2011) Source: OECD.Stat, Dataset: “International Trade by Commodity Statistics” (HS 2007), http://stats.oecd.org Top 3 ?

29. 29 / 38 Source: OECD.Stat, Dataset: “International Trade by Commodity Statistics” (HS 2007), http://stats.oecd.org Turkey’s Top Three Export Commodity Groups in Trade with Austria (as annual averages, 2009-2011)

30. 30 / 38 Empirical Observations on Turkish-Austrian Trade in Goods: Major Conclusions?  Turkey’s and Austria’s shares in global trade in goods have increased between 1980 and 2011.  However they are still not major players/exporters in world goods markets.  To a large extent, the trade between Turkey and Austria consists of two-way trade of “machinery and transport equipment” (SITC-7) and “manufactured goods” (SITC-6).  Moreover, Turkey and Austria are in general not unignorable trade partners for each other.  Possible reasons to think that this fact will not change easily in a short period of time:  Austria’s orientation towards new EU member countries (EU12) to make more trade since early 1990s.  Turkey’s trade orientation towards MENA region countries & Russian Federation since early 2000s. Back to Question?

31. 31 / 38 What then may occur, or is there still room for politics/initiatives to promote bilateral trade?  Positive indirect effects of labor movements and/or immigrants on Turkish exports to Austria?  Possible effects of Austrian FDIs in Turkey on bilateral trade between Turkey and Austria:  Substitution of existing trade with production in Turkey: negative effects?  Increases in exports of intermediate goods from Austria to Turkey: positive effects?  Austria and Turkey both have free market economies, and producers and exporters in both countries are free to choose where to export.  Both countries are WTO members too.  So, should we wait and see what happens? No ? ? Or?

32. 32 / 38 Economic Linkages between Austria & Turkey: International Migration (persons, 1990-2010) Source: OECD.Stat, Dataset: “International Migration Database”, http://stats.oecd.org, March 1, 2013

33. 33 / 38 Economic Linkages between Austria & Turkey: International Migration  Labor mobility between Turkey and Austria is functioning to a great extent in a one-way direction: from TR to A.  OECD’s “International Migration Database” shows that the stock of Turkish population in Austria is more than 113 thousand persons as of 2010. “Turkish Day” in Vienna, Austria (2009)

34. 34 / 38 Turkish Immigrants in Selected Countries (2010) Source: OECD.Stat, Aykut Kibritçioğlu’s calculations.

35. 35 / 38 Turkish Immigrants & Turkish Exports (2010) Source: OECD.Stat, Aykut Kibritçioğlu’s calculations. No export effects?

36. 36 / 38 Economic Linkages between Austria & Turkey: Foreign Direct Investments (mln. US$, 1980-2010) Source: OECD.Stat, Dataset: “FDI positions by partner country”, http://stats.oecd.org, March 1, 2013 back

37. 37 / 38 Still Room for Politics, or Political Initiatives?  High level political initiatives from both sides to foster trade in goods between two countries may be key to succeed in increasing the trade volume between two countries.  Governmental organizations and platforms to strengthen the economic linkages between Turkey and Austria?  Transition to green economy:  Joint green investments?  Joint green R&D efforts? Vienna, May 2011 President Gül’s Austria visit to boost economic relationship Institutions?

38. 38 / 38 Organizations & Platforms to Strengthen Economic Linkages between Turkey and Austria? Austrian Business Agency - Invest in Austria http://investinaustria.at Advantage Austria http://www.advantageaustria.org/tr/Oesterreich-in-Tuerkei.tr.html Invest in Turkey (Investment Support and Promotion Agency) http://www.invest.gov.tr İhracat Bilgi Platformu – Turkey Contact Point http://www.ibp.gov.tr - http://www.tcp.gov.tr back

39. 39 / 38 Appendix This file is downloadable at: http://kibritcioglu.com/iktisat/oenb-20130318.html

40. 40 / 38 Turkey Austria Source: WTO Statistics Database (SDB), http://stat.wto.org, September 2012

41. 41 / 38 Turkey Source: WTO Statistics Database (SDB), http://stat.wto.org, September 2012

42. 42 / 38 Austria Source: WTO Statistics Database (SDB), http://stat.wto.org, September 2012

43. 43 / 38 SITC, Revision 3 back

44. 44 / 38 Country Composition of Austrian Exports (millions of US Dollars, FOB, 1960-2011) Source: IMF eLibrary, Direction of Trade Statistics (DOTS) Database, http://elibrary-data.imf.org

45. 45 / 38 Country Composition of Austrian Imports (millions of US Dollars, CIF, 1960-2011) Source: IMF eLibrary, Direction of Trade Statistics (DOTS) Database, http://elibrary-data.imf.org

46. 46 / 38 Country Composition of Turkish Exports (millions of US Dollars, FOB, 1960-2011) Source: IMF eLibrary, Direction of Trade Statistics (DOTS) Database, http://elibrary-data.imf.org

47. 47 / 38 Country Composition of Turkish Imports (millions of US Dollars, CIF, 1960-2011) Source: IMF eLibrary, Direction of Trade Statistics (DOTS) Database, http://elibrary-data.imf.org

48. 48 / 38 International Migration between Austria & Turkey (1980-2010) Source: OECD.Stat, Dataset: “International Migration Database”, http://stats.oecd.org, March 1, 2013