Material and Methods

This study uses export and import data obtained from Turkey's State Statistics Office (http://www.die.gov.tr), the Food and Agriculture Organization (www.fao.org), and the Statistical Office of the European Commission (Eurostat; http://europa.eu.int/comm/eurostat/) for the following commodity groups:

• Oranges and mandarins, including fresh oranges and mandarins, orange and mandarin juice, and concentrated orange and mandarin juice;

• Lemons and limes, including fresh lemons and limes, lemon and lime juice, and concentrated lemon and lime juice;

• Grapefruits, including fresh grapefruit, grapefruit juice, and concentrated grapefruit juice; and

• Other citrus products such as kiwis, mangos, and tangerines, including fresh other citrus, other citrus juice, and concentrated other citrus juice (Hunt and Koppel, 2006).

RCAs and relative trade advantages (RTAs) are calculated for these commodity groups. The data set on citrus exports and imports covers the period of 1990 to 2003.

The concept of RCA is grounded in traditional international trade theory and is based on export specialization. Although variations have been proposed and tested, the original RCA index was formulated by Balassa (1965, 1977, 1979, 1986) and Fertö and Humbord (2001). Because the idea revolves around the concept of comparative advantage, a measure of comparative advantage is required. Although several alternative measures have been suggested (Masters, 1995), one of the most detailed and useful is the concept of RCA, particularly the popular method of examining trade liberalization and RCA. RCA is based on export performance and observed trade patterns and measures a country's exports of a commodity relative to its total exports and to the corresponding export performance of a set of countries. The RCA index is calculated as:

For this study, x represents citrus exports, i is a country, j is a citrus product, and w is a set of countries. RCA greater than 1 indicates that the country has a comparative advantage exporting the good but not importing that good (Richardson and Zhang, 1999).

The RCA for citrus is given as:where x represents citrus exports, i is a country, j is citrus variety, m explains citrus imports, and c is a set of countries. Here, the individual countries examined are Turkey as well as each EU-15 country (with Belgium and Luxemburg combined); the set of countries includes the EU-15 countries and Turkey. The groups of citrus products also separately include grapefruits, lemons, limes, oranges, mandarins, and other citrus.

The RTA (Vollrath, 1991) offers an alternative way of measuring a country's RCA. The RTA index shows the net trade advantage or disadvantage as a comprehensive measure of competitiveness. This index is given by the difference between the revealed export advantage (RCA_e) and the relative import penetration index, the Balassa index. If RTA is greater than 0, then trade advantage is revealed:

In this study, data from 1990 to 2003 were analyzed statistically using the EXCEL computer program (Callaert, 1999). The mean, sd, minimum and maximum values, and cv of each country were determined (Snedecor and Cochran, 1989) to show the following.

Results and Discussion

This study focuses on Turkey's citrus trade with the member states of EU-15. In calculating RCA and RTA, all trade flows refer to those between Turkey and the EU-15 countries.

Table 1 displays the summary statistics (mean, sd, minimum, maximum, and cv) for the RCA_e indices for Turkish citrus exports to the EU-15 countries. According to the mean RCA_e calculated from the period 1990 to 2003, RCA_e values for oranges and mandarins are higher in Denmark, Finland, Greece, Portugal, Spain, and Sweden compared with other countries. Those countries thus have large exports of oranges and mandarins and are competitive with the other countries. For oranges and mandarins, the main competitors of Greece, Portugal, and Spain are Denmark, Finland, and Sweden (re-export countries). Greece and Spain have a transport cost advantage over other EU-15 markets and face less competition from the EU-15 market in the orange and mandarin market than in the grapefruit market. For Turkey, the high cv values for these product groups indicate unstable indices over the past two decades. Moreover, RCA_e index values show stronger variability for Denmark, Finland, Greece, Portugal, Spain, and Sweden than for Turkey.

Table 1.Revealed comparative advantages of Turkey with respect to EU-15 countries (RCA_e).

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In the second line of Table 1, the RCA_e values of lemons and limes are higher for Turkey than for the EU-15 countries. Lemons and limes are clearly the dominant exports of Turkey, which is competitive with the EU-15 countries. The RCA_e for Turkish lemons and limes exhibited a noticeable stable trend during the past two decades (except in regard to Italy and Spain), whereas the RCA_e values for other EU-15 countries generally display dynamic trends. The low cv values for these product groups show that the indices were stable over the past two decades. Moreover, the variability in RCA_e index values is stronger for the other countries than for Turkey.

For grapefruit, Turkey had a mean RCA_e of 2.335 over the past two decades, which is higher than that of EU-15 countries with the exception of The Netherlands. The Netherlands does not produce grapefruit, but rather re-exports this fruit. Thus, Turkey also has a revealed comparative advantage. The cv values for Turkish grapefruit are less than those of the EU-15 countries. Other citrus product groups that did not reveal a comparative advantage are oranges, mandarins, and other citrus products. The cv values for these groups are all higher, except for Portugal.

The mean RCA_e of other citrus products is dominated by Italy, Sweden, and the United Kingdom. Together, these countries have a high sd in the RCA_e data, which shows that they have little stability for other citrus trade.

Table 1 shows that the RCA_e indices (especially for lemons and limes and for grapefruit) for the major EU-15 export countries (Spain, Italy, Greece) have increased significantly since the beginning of the Entry Price System (Göetz and Grethe, 2007). This suggests that conditions in the postliberalization period have had an adverse effect on the comparative advantage of the majority of EU-15 countries (EC, 2001).

Determining the level of Turkish trade competition in the EU market requires calculation of the RTA for some citrus product categories covering virtually all trade in Turkish exports to the EU-15 market. The shares of these product groups and Turkish exports to the EU-15 countries have also been calculated to grasp the relative importance of citrus product trade competition within total citrus trade. Table 2 summarizes the results. If RTA is greater than 0, then a trade advantage is revealed.

Table 2.Revealed trade advantages of Turkey with respect to EU-15 countries (RTA greater than 0).

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In terms of average values for the past two decades, Turkey has a trade advantage (RTA greater than 0) for lemons, limes, and grapefruit in the EU-15 market. Table 2 shows the RTA values for each product category averaged for 1990 to 2003 and how RTA varies by citrus product group in specific countries. On average, compared with EU-15 countries, Turkey has a comparative trade advantage in two citrus product groups (lemons and limes, grapefruit).

These results suggest that further trade policy reforms have weakened competitiveness in Turkish citrus exports. In particular, Turkey's desire to join the Customs Union has put pressure on Turkey to liberalize its markets for foreign trade. On the export side, these changes have forced enterprises to compete in EU markets with much less help from the government. As a result, the composition of Turkey's exports has evolved increasingly along the line of the country's comparative advantage. However, Turkey's comparative advantage in lemons and limes as well as grapefruit remains very strong because of its climate advantage. Between 1990 and 2003, the RCA_e index increased from 1.117 to 4.971 for lemons and limes and from 1.876 to 3.248 for grapefruit. In other words, Turkey moved from a comparative disadvantage to a comparative advantage in lemons and limes as well as grapefruit in contrast to the orange and mandarin segment and other citrus markets. These results show that, together with Turkey's climate advantage for some fruits, the country has also experienced a tendency toward decreasing competitiveness in its orange and mandarin exports, which is reflected in its comparative advantage (DPT, 1997). The major disadvantages also imposed from citrus trade side are the high production cost, labor cost, and transport costs, lack of production–infrastructure, technology, and so on, which we have not discussed in this study.

Tables 1 and 2 present the calculated citrus RCA_e and RTA index values for 14 countries (Belgium and Luxemburg are combined) and Turkey. Citrus (especially lemons and grapefruit) is clearly a dominant export product of Turkey relative to the EU-15 countries. The RCA_e and RTA for Turkey exhibit a noticeable upward trend during the past two decades, whereas the RCA_e and RTA values for the EU-15 countries generally display prominent downward trends. Moreover, the variability in the RCA_e and RTA index values is stronger for other EU-15 countries compared with Turkey, particularly during earlier years.

Spain, Italy, and Greece are main citrus producers. Excluding Turkey, the EU-15 countries within the Mediterranean region show a strong positive correlation with citrus production (perhaps as a result of similar climactic circumstances). When Turkey, Spain, Italy, and Greece are excluded from the analysis, RCA_e and RTA pairings are positively correlated for some citrus products (Malorgio and Hertzberg, 2007).

Turkish orange and mandarin exports have declined significantly since the beginning of the Entry Price System in the EU-15 market. This suggests that conditions in the last two decades have adversely affected the comparative advantage of Turkey for orange and mandarins. This may be because Spain has begun to produce more oranges, and Italy increased its production of mandarins (especially Satsuma; Argilos, 1999). For oranges and mandarins, although the Turkish RCA_e values have not changed significantly, the RCA_e values of Spain and Greece have increased substantially since 1990 (DPT, 2000).

Turkey's success is therefore not only defined by revealed comparative advantages, but is also the product of a favorable environment conducive to citrus production.

Conclusions

The aim of this study was to understand the Turkish citrus sector in the EU-15 citrus market. Main problems faced by Turkey are not yet being a full member of the EU and not being part of the Entry Price System. The elimination of government incentive payments and the rise of market liberalization also seem to have contributed to a steady decline in Turkey's share of the citrus market. These problems are hardly unique to Turkey. Several citrus-producing countries of the EU-15 have faced similar circumstances and have managed to maintain their pre-eminence in the EU-15 market.

This article has attempted to explain success in citrus production and trade by applying comparative advantage theory. Building on the existing literature, an index of the revealed comparative advantage (RCA_e) was used to measure export performance as a reflection of comparative and competitive advantage. This index was used to identify particular patterns among EU-15 countries and Turkey.

The resulting RCA_e index values for citrus-producing countries tends to be positively correlated, whereas countries not producing citrus tend to be negatively correlated. This appears to confirm a significant differentiation between production and re-export in citrus markets. The RCA_e index values for countries within the same region tend to be similar, suggesting similar regional influences on RCA_e index values (e.g., climate). The RCA_e index values appear to have changed significantly since the start of the EU Entry Price System. For most countries analyzed here, liberalization seems to have had a detrimental effect on export performance.

The findings show that Turkey's citrus product exports to the EU-15 market have grown, likely as a result of Turkey's favorable climate, which is relatively better than those of other countries for citrus products (except for Spain, Greece, and Italy). The RCA analysis shows that competitiveness is particularly the result of relative prices, and thus does not indicate a sustainable competitiveness resulting from lack of added value in the export items.

Although this article reveals evidence of competitiveness, it does not compare the conditions of Turkey and rival EU countries for sustained competitiveness. Sustainability in competitiveness depends on political, legal, and macroeconomic foundations as well as microeconomic conditions for prosperity such as company operating practices and strategies, quality of inputs, infrastructure, and institutions. Competitiveness must therefore shift from comparative advantage (low-cost labor or natural resources) to competitive advantage associated with productive and distinctive products and processes.

Year-to-year variations in the RCA_e indices are substantial for Turkey in regard to lemons and grapefruits. This may imply the importance of factors such as inflation, political stability, climate, and exchange rates as well as their influence on export performance.