25 Indeed, skilled labor intensive products drove the expansion of Turkish exports in 200004 and were the bright spot in export performance in 1996-2000 that barely kept pace with the growth in Pan-European external import demand. Exports of skilled labor intensive products grew on average (least square average) over 1990-2004 at 21 percent per year, with the growth clearly accelerating towards the end of this period. Least square average growth rates were 12 percent for 1990-95, 22 percent for 1996-2000 and 31 percent for 2000-04. Improvements in competitiveness in Pan-European markets have been responsible for the expansion in exports since 1994. While in 1990-93 the share of skilled labor intensive products imported from Turkey in Pan-European external imports, as well as in EU-15 imports, was stable at around 1 percent, it increased to 1.2 percent in 1994 and kept growing every year in 1995-2004. Leaving aside a very small increase in the share of unskilled labor intensive products in 2000 over 1996 (0.1 percentage point) in Pan-European imports of these products, skilled labor intensive products were the only group that increased its share during this period (Table 13).

A sharp decline in the share of natural resource intensive products in Turkish exports has accompanied rapid growth in skilled labor intensive exports. After a steep decline in 1990-92, the share of natural resource products was stable until 1997. During this period the rise of skilled labor intensive products was at the expense of unskilled labor intensive products whose share fell from 58 percent in 1993 to 52 percent in 1997 (Figure 8).

Capital intensive exports regained their vigor in 2000-03 following a period of relatively uninspiring performance in 1996-99. Their share in Turkey’s Pan-European exports stagnated in 1996-99 after significantly expanding in 1990-94 from 6 percent to 9 percent and increased to 9.6 percent in 2000, 10.3 percent in 2003 and slightly fell to 9.7 percent in 2004.

**Table 13:** _Factor content of Turkey’s Pan-European exports in 1996-2004 and their dynamics over 1999-2004 (in million of US dollars and percent)_

|||||||||||Least Sq|uare Gro|wth|
|---|---|---|---|---|---|---|---|---|---|---|---|---|
|Factor Intensity|1996|1997|1998|1999|2000|2001|2002|2003|2004|1990-95|1996-00|2000-04|
|<br>|<br>|<br>|**Turke**<br>|**y's Exp**<br>|**orts to P**<br>|**an-Euro**<br>|**($ milli**<br>|**on)**<br>|||||
|Natural Res.|3,496|3,606|3,478|3,643|3,318|3,586|3,494|4,414|4,991|3.6|-0.9|10.2|
|Unskilled Labor|7,019|7,518|8,389|8,557|8,634|9,408|11,159|14,524|16,072|6.7|5.4|16.8|
|Capital|1,164|1,312|1,476|1,543|1,684|1,995|2,318|3,283|3,680|15.2|9.0|20.6|
|Skilled Labor|1,777|1,984|2,841|3,556|3,929|5,087|6,532|9,637|13,198|11.8|21.7|30.6|
|All above goods|13,457|14,420|16,185|17,300|17,565|20,076|23,503|31,859|37,941|7.0|7.1|20.0|
|||||||||||Percent|Points C|hange|
||||**Expor**|**t Share**|**of Pan-E**|**uro (%)**||||1990-95|1996-00|2000-04|
|Natural Res.|26.0|25.0|21.5|21.1|18.9|17.9|14.9|13.9|13.2|-5.5|-7.1|-5.7|
|Unskilled Labor|52.2|52.1|51.8|49.5|49.2|46.9|47.5|45.6|42.4|-0.6|-3.0|-6.8|
|Capital|8.6|9.1|9.1|8.9|9.6|9.9|9.9|10.3|9.7|2.5|0.9|0.1|
|Skilled Labor|13.2|13.8|17.6|20.6|22.4|25.3|27.8|30.2|34.8|3.6|9.2|12.4|
|||||||||||Percent|Points C|hange|
||||**Share**|**in Pan-**|**Euro Ex**|**ternal Im**|**ports (**|**%)**||1990-95|1996-00|2000-04|
|Natural Res.|1.5|1.5|1.7|1.7|1.2|1.4|1.4|1.4|1.5|0.2|-0.2|0.2|
|Unskilled Labor|8.2|8.1|8.7|8.8|8.3|9.1|10.4|11.1|11.5|1.0|0.1|3.2|
|Capital|0.5|0.5|0.5|0.5|0.5|0.6|0.7|0.9|0.9|0.1|0.0|0.4|
|Skilled Labor|2.0|2.1|2.7|3.3|3.6|4.9|5.9|6.9|8.1|0.8|1.6|4.5|
|All above goods|2.0|2.1|2.3|2.4|2.1|2.5|3.0|3.3|3.5|0.3|0.0|1.5|

Source: Computations based on Pan-European import data from UN COMTRADE Statistics.