Intra-Industry Trade in High-Tech Sectors, Foreign Direct Investments, and Eco-Innovation: A Causality Analysis for Türkiye and South Korea
Chapter from the book:
Sevinç,
H.
(ed.)
2024.
Current Research and Applications in International Economics.
Synopsis
The inter-industry trade, based on comparative advantages and factor endowment theory, argues that an economy can gain from international trade by acting as an exporter or importer due to constant returns of scale, homogenous products, and perfect competition. However, the intra-industry trade theory argues that an economy can be both an exporter and an importer due to factors such as imperfect competition, increasing returns to scale, and differentiated products. In this way, economies will gain more from international trade. In this framework, this paper aims to test the causality relationship between intra-industry trade in high-tech sectors, foreign direct investments, and eco-innovation in Türkiye and South Korea for the period of 1990-2021. Toda-Yamamoto (1995) causality test is used for causality analysis. For Türkiye, the results prove that there is a unidirectional causality relationship from foreign direct investments to intra-industry trade and a bidirectional causality relationship between eco-innovation and intra-industry trade. For South Korea, there is a unidirectional causality relationship from intra-industry trade to eco-innovations and a bidirectional causality relationship between foreign direct investments and intra-industry trade.