Ahmet Ertugan1, Özkan Demir2, Salih Kalayci3
1.Near East University, [email protected]
2.Near East University, [email protected]
3.Bursa Technical University, [email protected]

ABSTRACT
The main purpose of this article is to examine the development of foreign trade of automotive industry of countries such as USA, China, India, Japan and Germany from 1999 to 2017 by implementing panel data analysis. The variables are export volume, automobile production capacity and agricultural production capacity. Data is obtained from the official website of the World Bank (2019) and the International Organization of Motor Vehicle Manufacturers OICA (2019). Panel data analysis is applied from 1999 to 2017 (annual data) by taking into account the automobile and agricultural production volume which are determined as independent variables and export volume is determined as dependent variable for the USA, Germany, France, China, India and Japan. According to results on the basis of Heckscher Ohlin theory, USA, Germany and France begin to switch from capital-intensive sector to labour-intensive sector which is empirically proved through panel data analysis. On the other hand, China, India and Japan enter in the process of capital-intensive (automobile industry) sector instead of labour-intensive sector (agriculture industry) which is empirically demonstrated through panel data analysis as well. When the fragmentation theory is taken into account, the western countries draw back due to the factors of lowering production costs, lowering prices and advancing in production technology in terms of know-how, which is empirically proved by PDA. Furthermore, when the fragmentation theory is taken into account, the eastern countries' strategy of dispersing into different countries in terms of production has been benefited by obtaining knowledge and technology. Therefore, they increase their market share by producing value-added goods. In the conclusion, the processes who are leading to bankrupt the companies getting into act in capital intensive sectors especially such automotive are approached through the discussion about projections of macroeconomic policies of countries.
Keywords: International Trade, Heckscher Ohlin Theory, Fragmentation Theory, Automotive Industry, Comparative Advantage Theory.
Jel Codes: P33, O24, L6, O24.

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