33

**Table 19:** _Direction of trade in ‘buyer-driven’ network products and parts in 1995, 2000 and 2004 (in percent)_

||**EU-25**|||**Oth**|**er Pan-E**|**uro**|**ROW**|||
|---|---|---|---|---|---|---|---|---|---|
||1995|2000|2004|1995|2000|2004|1995|2000|2004|
|**T&C network**||||||||||
|Total exports|70.1|66.6|65.4|2.6|2.8|3.7|27.3|30.6|30.9|
|Imports oftextiles|33.6|47.9|36.0|2.9|2.5|2.6|65.2|51.5|61.4|
|**Footwear network**||||||||||
|Total exports|40.7|31.3|51.7|6.5|2.6|8.3|52.9|66.1|40.0|
|Imports ofparts|41.2|94.0|68.7|51.7|5.3|0.32|58.8|5.9|31.0|
|**Furniture network**||||||||||
|Total exports|39.3|57.2|56.1|3.5|3.5|4.3|57.2|39.2|39.6|
|Imports ofparts|75.3|80.0|75.0|1.0|0.5|1.0|23.7|19.5|24.0|

Source: Computations based on Turkey reporting to UN COMTRADE Statistics.

In all, developments in trade of ‘buyer-driven’ value chains seem to support the following observations: Respective industrial sectors in Turkey are not enclaves, but appear to be soundly immersed in the domestic economy. Each of them has been competitive in Pan-European markets registering gains in market shares consistently and without reversals over time, which, in turn, indicates continuous industrial modernization. These sectors have become parts of global value chains, organized mainly by EU firms, as trade with the EU and other Pan-European partners accounts for more than half of Turkey’s total trade turnover. Furthermore, although T&C towers over other sectors involved in ‘buyer-driven’ chains, furniture network has recently displayed strong growth outperforming in terms of exports other chains.

# **B** **_._** _‘Producer-driven’ chains: automotive and information technology networks_

Production fragmentation in vertically integrated sectors has led to the emergence of ‘producer-driven’ network trade. It differs in several important respects from traditional, ‘buyerdriven’ global value chains. It includes two-way flows of parts and components across firms located in various countries for further processing and development occurring at several tiers with large multinational corporations playing a central role in coordinating the production process.

‘Producer-driven’ networks are mainly present in capital- and skilled-labor-intensive industries such as automobiles, computers, semiconductors and heavy machinery. Automotive and information and communication technology (ICT) represent the most dynamic ‘producerdriven’ networks. While outsourcing in clothing, footwear or furniture has rarely been accompanied by significant inflows of FDI, although there have been exceptions, the entry into supply chains of automotive and ICT networks is almost inconceivable without MNCs bringing capital, technology and marketing, albeit there are exceptions to this rule.<sup>17</sup> As MNCs drive trade in these two networks, it may be also referred to as “MNC-driven” network trade.<sup>18</sup> Not surprisingly, linkages with EU firms have been driving ‘producer-driven’ network trade and they appear to be much stronger than in ‘buyer-driven’ trade with the EU accounting for a larger share of network trade. Other Pan-European countries’ firms and consumers remain marginal, although their significance increased over 2000-04. Automotive sector is more EUconcentrated than the ICT industries. While EU markets take a larger share of total ICT network’s exports than automotive network’s exports, ICT firms are much more dependent on imports of final products in particular from ROW (Table 20).

> 17 A good example is the development of automotive industry in South Korea.

> 18 The empirically observed positive correlation between multinational activity and intra-industry trade would also clearly point in this direction (Markusen 1998).