ECON 353

INTRODUCTION TO INTERNATIONAL ECONOMICS I

TERM PROJECT
The Trade Structure Between Turkey and Norway

TAHA SANTALU 1723436 23 January 2012

KINGDOM OF NORWAY
Official language: Norwegian (Bokmal and Nynorsk) Area: 385,199 sq. km (water 7.0 %) Annual population growth rate: 1.3 % Capital: Oslo (population: 599,230) Other cities: Bergen (260,392), Trondheim (173,486) Population: 4,885,240 (2010) Demonym: Norwegians Density: 12.5/ sq. km

Terrain: Rugged with high plateaus, steep fjords, mountains and fertile valleys. Climate: Temperate along the coast, colder inland. GDP (nominal 2010): $412,989,604,299 GDP Per Capita (nominal 2010): $84,538.2 Annual GDP growth rate: 2.9 % (2010)

GDP PPP (2010): $277,941 million GDP per capita PPP (2010): $53,738 Unemployment (2010): 3.4 % HDI (2011): 0.943 (very high) (1st) Education: 10 years compulsory Gini (2008): 25.8 (low) (5th)

Exchange Rate: $1=5.8861 Kroner (December 2011) Literacy: 100 %

Current Account Balance (2010): 53,243 US$ Current Acc. Bal. per GDP (2010): 12.4% Work force (2011, 2.6 million): Legislators, senior officials, and managers 6%; professionals 13%; technicians and associate professionals 25.3%; clerks 6.8%; service workers and market sales workers 24%; agricultural, forestry, and fishery workers 2.2%; craft and related trades workers 10.2%; plant and machine operators and assemblers 7.1%; other occupations and unspecified 5.2%. Natural resources: Petroleum, natural gas, iron ore, copper, lead, zinc, titanium, pyrites, nickel, fish, timber, hydropower. Agriculture: Products--dairy, livestock, grain (barley, oats, wheat), potatoes and other vegetables, fruits and berries, furs, wool, pork, beef, veal, fish. Industry: Types--petroleum and gas, food processing, shipbuilding, pulp and paper products, aluminum, ferroalloys, iron and steel, nickel, zinc, nitrogen, fertilizers, petrochemicals, hydroelectric power, refinery products, timber, mining, textiles, fishing, transport equipment, electronics. GDP by activity (2010): Oil and gas 22%; general government 16%; manufacturing, mining, electricity, building and construction 15%; value added tax (VAT), etc. 11%; commodities, vehicle repairs, etc. 7%; communication and transport

4%; agriculture, forestry, and fishing 1%; other services (commercial, housing, financial, private health/education, hotel and catering, etc.) 24%. Trade (2010): Exports (f.o.b.)--$178 billion. Major markets--U.K. 27%, Netherlands 12%, Germany 11%, Sweden 7%, France 6%, U.S. 5%. Imports (f.o.b.)--$122 billion. Major suppliers--Sweden 14%, Germany 12.3%, China 8.4%, Denmark 6.1%, U.K. 5.9%, U.S. 5.2%.

REPUBLIC OF TURKEY
Official language: Turkish Area: 783,562 sq. km (water 1.3 %) Annual population growth rate: 1.235 % Capital: Ankara (population: 4.77 million) Other cities: Istanbul (13,255,685), Izmir (3.949 million) Population: 72,752,325 (2010) Demonym: Turkish Density: 92.84/ sq. km

Terrain: Narrow coastal plain surrounds Anatolia, an inland plateau becomes increasingly rugged as it progresses
eastward. Turkey includes one of the more earthquake-prone areas of the world. Climate: Temperate in the coastal regions, relatively rainy in Black Sea Region, and a continental climate in central regions. GDP (nominal 2010): $734,364,471,760 GDP Per Capita (nominal 2010): $10,094.03

GDP PPP (2010): 1,115,994 million US$ GDP per capita PPP (2010): $12,300 Annual GDP growth rate: 8.2%(2010) Unemployment (2010): 12 % HDI (2011): 0.699 (high) (92nd) Education: 8 years compulsory Gini (2008): 39.7 (64th) Exchange Rate: $1=1.89 Turkish Lira (December 2011) Literacy: 91 %

Current Account Balance (2010): -48,445 million US$ Current Acc. Bal. per GDP (2010): -6.6 % Work force (27.43 million) : By occupation--services 47.1%; agriculture 26.5%; industry 18.9%; and construction 7.5%. Natural resources: Coal, chromium, mercury, copper, boron, oil, gold. Agriculture (9.3% of GDP) : Major products (CIA World Factbook)--tobacco, cotton, grain, olives, sugar beets, hazelnuts, pulse, citrus; livestock. Provides about 26.5% of jobs (2011) and 3.5% of exports (Jan.-July 2011). Industry (25.6% of GDP): Major growth sector, types--automotive, electronics, food processing, textiles, basic metals, chemicals, and petrochemicals. Provides about 18.9% of jobs and 93.8% of exports. GDP by activity: Agriculture 9.6 %, industry 26.6 %, services 63.8 %. Trade: Exports (merchandise)--(2005) $73.5 billion; (2006) $85.5 billion; (2007) $107.2 billion; (2008) $132 billion; (2009) $102.1 billion; (2010) $113.9 billion. Export types(Turkish Statistical Institute, 2011)--textiles and apparel, industrial machinery, iron and steel, electronics, petroleum products, and motor vehicles. Imports (merchandise)--(2005) $116.8 billion; (2006) $139.6 billion; (2007) $170.1 billion; (2008) $201.8 billion; (2009) $140.4 billion; (2010) $185.9 billion. Import types--chemicals, petroleum, machinery, motor vehicles, electronics, iron, steel, plastics, precious metals. Major partners-Germany, U.S., Italy, France, Russia, Japan, China, Iran, Iraq, U.K.

i. INTRODUCTION

The aim of this report is to show the trade structure between Turkey and Norway. Before starting, general profiles of the countries have been given in order to develop a rough idea about the countries and their economies. The report consists of two main sections. Firstly, the social and economic structures of the countries are shown through a multiple comparison method with the variables of GDP, GDP per capita, population and some other relevant indicators of geographical and economic determinants in order to demonstrate the bilateral trade role of Turkey and Norway. Secondly, commodity groups that are exported and imported between these two countries are analyzed both in a current and historical manner, in order to understand the historical evolution of the trade and the current trade pattern that dominates. In this section, also the types of sectors where exports and imports are specialized and how these are changing through time are discussed. The report is concluded with making some analogies and connections between the trade structure of the given countries and the trade models that prevail. ii. SOCIAL AND ECONOMIC STRUCTURES OF COUNTRIES Norway, with its population of 4.85 million on the northern flank of Europe, is today one of the most wealthy nations in the world, both measured as GDP per capita and in capital stock. The country has a very high standard of living compared with other European countries, and a strongly integrated welfare system. On the United Nation Human Development Index, Norway has been among the three top countries for several years, and in some years the very top nation. Huge stocks of natural resources combined with a skilled labor force and the adoption of new technology made Norway a prosperous country during the nineteenth and twentieth century. On the other hand, Turkey with a relatively high population of 72.7 million, is located at southeast of Europe and has a modest income and capital stock. Turkey and Norway differ vastly in the social and economic senses. There is a huge gap almost in every variable when a comparison is made. From here on till the next section a comparison of some important elements is made between the two countries.

Location has been a great determinant in the state of countries. Lying in the Arctic circle has given some disadvantages to Norway. These disadvantages show themselves mostly when the agriculture of Norway is checked. Since two-thirds of the country is tundra, rock, or snowfields, and one-quarter is forested, there is only a limited amount of cultivated land in Norway and good agricultural land is rare. Nevertheless, the advantages that location has bestowed upon Norway can not be dismissed. Norway's economic growth has been fueled by an abundance of natural resources, including petroleum exploration and production, hydroelectric power, and fisheries. The mountains of Norway are rich in minerals; there are deposits of iron ore, copper, titanium, coal, zinc, lead, nickel, and pyrites, and large offshore reserves of petroleum and natural gas (CIA World Factbook). Whats more, close proximity to important export markets in Europe has facilitated Norway's development into one of the richest countries. The flipside of the coin is not as bright as the other one. Turkey's location at the crossroads of Europe and Asia, makes it a country of significant geostrategic importance and and a country with important future prospects of becoming an economic power. However, currently Turkey is a only a large country with relatively few natural resources. Turkey's most important minerals are chromite, bauxite, and copper. Still, minerals together with mining activities do not contribute to the GDP of the country more than 4%. Setting aside these negative facts, thanks to the high proportion of the arable lands, Turkey has become an important producer and exporter of agricultural commodities on world markets and is estimated to be the worlds 7th-largest agricultural producer. Although the economic importance of agricultural sector relative to the industrial and service sectors has been declining, agriculture still remains a key part of Turkeys society, employing about one quarter of the workforce and generating most of income and employment in rural areas. (OECD-Evaluation of Agricultural Policy Reforms in Turkey). Nominal GDPs of Norway and Turkey as of 2010 were respectively, $412,989,604,299 and $734,364,471,760 as reported by the US Department of State. As the magnitude and populations of the countries are considered, it becomes possible to see that Norway proportionally makes a better use of its resources compared to Turkey. As a proof for this, GDP per capita or the purchasing power parity (PPP) which is obtained through the value of all final goods and services produced within a country in a given year divided by the average population for the same year, indicates quite a disparity between the countries in the sense of standard of living. Again according to the US Department of State, Norway is one of the world's richest countries in per capita terms with $53,738 per capita GDP, thereby being
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way ahead of Turkey which has a modest $12,300 per capita GDP. It is easy to see that Turkeys high population, 72,752,325 compared to Norways 4,885,240 (CIA World Factbook), has a great role in this difference between purchasing power parities. When it comes to the the current account balances of the two countries in order to measure the natures of countries foreign trades, Norway has a positive $53 243 000 000 balance compared to Turkeys negative $48 445 000 000 according to the data of World Trade Organization. This means a current account surplus for Norway and also is equivalent to %12.4 of Norways GDP (Trade balance per GDP). While this current account surplus increases Norways net foreign assets by the corresponding amount, the current account deficit which is -%6.6 of GDP of Turkey implies a paralleled reduction of the net foreign assets of Turkey. Profiles of people in both countries also differ vastly. Human capital in each nation, which is the stock of competencies, knowledge and personality attributes embodied in the ability to perform labor so as to produce economic value, is measured by Human Development Index (HDI). It is the combination of "Life Expectancy Index", "Education Index" and "Income Index". The Life expectancy index reveals the standard of health of the population in the country; education index reveals the educational standard and the literacy ratio of the population; and the income index reveals the standard of living of the population. The Human Development Index (2011) that was released by United Nations Development Programme makes it clear that Norway with 0.943 (very high human development) HDI topped the list and thus was crowned as the worlds best place to live. Turkey in the same list was ranked 92nd with an index of 0.699 (high human development), nonetheless, generated the largest HDI improvement in the region of Eastern Europe and Central Asia. These increments in HDI indexes mean that in both countries there is a higher rate of human capital formation and economic development in response to higher standard of education and health. Whats more, per capita incomes of the nations also increase. Norway has a 2.6 million labor force with a participation rate of 71.8%. Female labor force participation rate is 63% and sectoral distribution of the labor force of the country is agriculture 2.9%, industry 21.1%, and services 76%. (worldbank). Thanks to its human capital, Norway enjoys a highly skilled labor force, however, in recent years labor costs in Norway have increased faster than in its major trading partners, thereby eroding its industrial competitiveness. On the other hand, Turkey has a labor force of 27.43 million people as
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services, agriculture and industry sectors have respectively 47.1%, 26.5%, 18.9% shares in that labor force. The labor force participation rate in the country is 50%. This 50% is however a little tricky considering the fact that it is extremely lopsided because female labor force participation rate is only 21.6% (Turkstat). In addition to this, Turkey has some of the highest labor taxes and tightest regulations among members of the Organization for Economic Cooperation and Development, says the IMF Survey Magazine (2007). This has resulted in high unemployment (10%), low labor force participation (50%), and a large informal sector (employing about one-half of all workers). The large informal sector eats into tax revenue. It also lowers productivity by preventing companies from taking full advantage of economies of scale (informal firms must remain small to avoid detection) and by restricting their access to capital and suppliers (formal sector businesses are reluctant to engage informal ones). The technological readiness of countries is both an important factor in the and result of their wealth. Todays world judges progress by the technological advancement achieved by their country It is true, since technology makes life simpler and also provides access to things that are things that help people achieve a better lifestyle. It also reflects the political and economic stability of the nation. As this is the case, according to the World Economic Forums Global Competitiveness Report 2004-2005, which published the technology index that was created with such indicators as countries spending on R&D, the creativity of countries scientific community, personal computer and internet penetration rates, Norway with a 5.17 index ranked worlds 9th most technologically-oriented country where US topped the list with a 6.24 index. Turkey was placed at 51st with an index of 4.1 barely above the weighted average 4.0. In terms of capital stock accumulations as stated by Indexmundi: the latest value for gross capital formation (current US$) in Norway was $88,069,210,000 as of 2010. The annual % growth of gross capital formation in Norway was 8.50 and gross capital formation was equal to 21.32% of the Norwegian GDP. On the other hand, the latest value for gross fixed capital formation (current US$) in Turkey was $137,644,000,000 as of 2010. This gross fixed capital formation grew 29.94% and equalled to 18.74% of Turkish GDP.

iii. COMMODITY GROUPS THAT ARE EXPORTED AND IMPORTED Bilateral trade between Turkey and Norway Sources : ITC calculations based on UN COMTRADE statistics. Unit : US Dollar thousand
Turkey's exports to Norway Value in 2010 and share in total exports

Product Product label code

Value Value Value Value Value Value Value Value Value in 2001 in 2002 in 2003 in 2004 in 2005 in 2006 in 2007 in 2008 in 2009

TOTAL

All products

70,291 114,554 171,420 206,258 245,165 260,896 375,340 391,201 384,284

343,778 100%

'08

Edible fruit, nuts, peel of citrus fruit, melons

3,445

3,319

3,446

5,540

8,855

6,193

6,570

6,174

6,093

8,419 2.44%

'19

Cereal, flour, starch, milk 178 preparations and products Vegetable, fruit, nut, etc 3,882 food preparations Ores, slag and ash

214

544

1,800

2,196

2,544

2,314

2,861

3,377

2,883 0.83%

'20

4,187

4,357

6,867

7,747

4,766

3,855

4,999

7,041

6,272 1.82%

'26

5,323

1,554

19

6,929

6,850

5,945 1.72%

'27

Mineral fuels, oils, 91 distillation products, etc Plastics and articles thereof

43

69

247

211

99

1,306

2,602

13,918

5,374 1.66%

'39

707

685

1,496

2,276

3,743

3,128

3,122

4,020

5,692

4,461 1.29%

'40

Rubber and articles

142

347

785

1,082

1,186

1,223

2,116

3,244

2,437

3,560 1.03%

thereof Carpets and other textile floor coverings Articles of apparel, accessories, knit or crochet Articles of apparel, accessories, not knit or crochet

'57

529

550

458

378

546

785

1,230

2,370

2,696

4,456 1.29%

'61

19,808 22,428

34,372

36,215

40,811

36,186

54,574

49,562

46,435

52,902 15.38%

'62

13,699 12,378

16,482

18,757

21,410

17,459

19,066

23,245

19,159

22,681 6.59%

'63

Other made textile 5,227 articles, sets, Ceramic products Articles of iron or steel Copper and articles thereof Aluminium and articles thereof Machinery, nuclear reactors, boilers, etc Electrical, electronic equipment Vehicles other than railway, tramway

4,731

4,996

6,766

7,603

7,909

9,138

10,640

7,503

9,859 2.86%

'69

1,636

1,710

2,083

2,755

2,916

3,836

4,835

5,514

3,970

3,654 1.06% 5,931 1.72%

'73

580

885

4,555

3,747

6,747

3,124

8,563

6,567

5,576

'74

171

378

1,105

1,449

1,160

1,336

3,920

2,521

2,274

4,168 1.21%

'76

1,349

1,194

1,727

1,884

2,980

2,701

3,528

4,845

3,493

4,078 1.18%

'84

889

1,383

1,577

2,210

4,276

9,438

14,091

10,576

10,662

23,378 6.80%

'85

2,833

5,794

8,822

12,615

19,561

21,132

24,128

19,461

11,747

12,065 3.50%

'87

3,179

13,144

34,947

73,238

68,050

71,033

79,443

70,193

51,454

63,198 18.38%

'89

Ships, boats and other floating structures

30,890

34,635

3,641

24,516

49,977

102,062 125,360 158,646

71,055 20.66%

'94

Furniture, lighting, signs, 419 prefabricated buildings

557

1,109

1,550

1,255

1,813

2,495

4,111

3,888

4,411 1.28%

Norway's imports from Turkey Product code

Product label Value Value Value Value Value Value Value Value Value Value in 2010 in 2001 in 2002 in 2003 in 2004 in 2005 in 2006 in 2007 in 2008 in 2009

TOTAL

All products

115,593 176,995 257,619 351,827 441,113 426,797 582,687 591,249 556,232 553,161

Norway's exports to Turkey Product code Product label Value Value Value Value Value Value Value Value Value Value in 2010 in 2001 in 2002 in 2003 in 2004 in 2005 in 2006 in 2007 in 2008 in 2009 209,829 307,602 396,596 401,111 323,206 495,405 383,748 394,462 683,443 524,166

TOTAL

All products

Turkey's imports from Norway Value in 2010 and share in total imports

Product code

Product label

Value Value Value Value Value Value Value Value Value in 2001 in 2002 in 2003 in 2004 in 2005 in 2006 in 2007 in 2008 in 2009

TOTAL

All products

251,388 341,730 423,183 495,367 374,203 496,458 495,568 622,659 771,594

828,588 100%

'03

Fish, crustaceans, 6,971 molluscs, aquatic invertebrates

8,634

10,976

23,212

25,694

31,281

41,171

51,483

51,816

78,937 8.98%

10

nes Animal,vegetable fats and oils, 275 cleavage products, etc Salt, sulphur, earth, stone, 399 plaster, lime and cement Mineral fuels, oils, distillation products, etc Inorganic chemicals, precious metal compound, isotopes Pharmaceutical products

'15

79

373

1,288

1,062

6,112

9,511

16,369

16,978

19,399 2.20%

'25

923

1,489

1,292

2,882

2,781

2,366

2,663

2,468

2,236 0.25%

'27

158,911 155,922 243,854 243,879 173,735 262,023 216,668 268,456 367,884

334,861 38.11%

'28

1,411

2,742

1,596

2,555

2,927

2,992

2,943

4,221

4,676

8,529 0.97%

'30

498

593

308

477

1,962

4,327

3,605

6,654

6,809

8,292 0.94%

'32

Tanning, dyeing extracts, tannins, 422 derivs,pigments etc Miscellaneous chemical products Plastics and articles thereof

782

1,442

1,657

2,421

1,901

2,425

2,075

2,819

2,347 0.26%

'38

358

487

744

1,922

2,996

1,892

1,805

6,519

2,376

3,507 0.39%

'39

10,095

12,204

13,067

18,450

13,201

18,939

17,792

21,807

27,634

41,530 4.72%

'41

Raw hides and skins (other than 5,242 furskins) and leather Pulp of wood, fibrous cellulosic 450 material, waste etc Paper & paperboard, articles of pulp,

5,511

4,049

3,414

3,348

2,653

3,304

347

479

2,065 0.23%

'47

176

454

973

1,273

66

26

8,183 0.93%

'48

7,064

10,868

17,109

11,399

10,547

11,628

17,332

21,812

8,976

14,385 1.63%

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paper and board 22,882 2.60% 7,387 0.84% 198,999 22.64%

'72

Iron and steel

4,934

8,499

9,401

11,066

15,089

11,801

10,034

19,384

11,534

'75

Nickel and articles thereof Aluminium and articles thereof

54

254

1,973

4,510

4,889

1,174

27,711

15,969

4,020

'76

20,598

43,814

57,439

55,285

43,142

37,768

29,413

38,492

140,083

'84

Machinery, nuclear reactors, 8,336 boilers, etc Electrical, electronic equipment Vehicles other than railway, tramway Ships, boats and other floating structures Optical, photo, technical, medical, etc apparatus

14,273

15,031

25,138

34,681

53,140

63,175

83,322

78,292

37,904 4.31%

'85

4,065

11,845

4,999

7,943

11,297

13,302

11,811

23,361

13,280

11,525 1.31%

'87

77

153

115

305

669

861

1,177

2,077

7,708

2,396 0.27%

'89

451

25,170

20,173

48,438

3,564

2,849

6,123

13,188

75

1,732 0.19%

'90

2,268

3,136

3,229

4,331

6,458

7,234

9,898

7,134

6,084

7,399 0.84%

Note: Norways only total export to and imports from Turkey values have been provided. Considering the fact that Turkeys exports are Norways imports, providing only Turkeys exports and imports are sufficient.

As a developing country Turkey increases its share in the world trade and therefore, she also has much more willingness to trade with Norway, too. This is obvious from the increasing number of imports from and exports to Norway. It is seen from the data provided above that the commodities that Turkey exports to Norway have a large spectrum while Norway exports to Turkey mostly petrol related commodities, aluminium and articles and fisheries. Since Norway is naturally well endowed and is rich with minerals and fisheries, it is concluded that Norway uses its natural advantages extensively and its export regime towards
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Turkey is mostly based on them. For some commodity groups, imports from Turkey constitute more than 25 percent of total imports of Norway from Turkey. These commodity groups are apparels and accessories, in other words textiles. These commodity groups represent industries in which Turkey as the labor abundant country compared to Norway, has a comparative advantage in terms of low labor costs. Vehicles other than railway and tramway, coupled with ships and boats are also Turkeys important export commodities to Norway although they belong to capital intensive industries. In the general sense Turkeys export commodities mainly have been steady and have not seen much volatilities in their shares except for the Ships, boats and other floating structures commodity group, which has become a main export of Turkey to Norway in the last years. Norway has consistently been one of Turkeys main suppliers of mineral fuels, oils, distillation products, etc. For some different types of minerals and aluminium articles, also fisheries (despite lying on a peninsula), it is seen that Turkey is heavily dependent on Norway, considering their high shares in Turkeys total imports of respective commodity groups. Thus, for the Norways exports to Turkey case, trade pattern reveals comparative advantages due to resource abundance. This exports regime makes Norway quite sensitive to global business cycles. Among the commodity groups that are classified above in the data, those with product codes 27, 39, 76, 84, 85, 87 and 89 are common goods that are traded among Turkey and Norway bilaterally. 27, 39, 76 and 84 which respectively are mineral fuels, oils, distillation products, plastics and articles thereof, aluminium and articles thereof, and machinery, nuclear reactors, boilers, are those commodity groups which obtained through either capital intensive industries or natural resource abundant industries and there are a great differences between the amounts that Turkey imports from and exports to Norway. Norway dominates in these commodities. Whats more, the volatility in these numbers is also intriguing due to the fact that natural resources naturally are quite sensitive to global business cycles as stated above. Number 85 which represents the trade of electrical, electronic equipments" demonstrates a draw between countries although it is also a capital intensive product group and it would be expected that Norway dominated it. Numbers 87 and 89 are however a far cry from the theoretical predictions. Vehicles other than railway and tramway (87) and ships, boats and other floating structures (89) are heavily capital intensive industry products, anyhow, Turkey has a major edge to Norway in those commodity groups trades.

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iv. CONCLUSION

The trade between Turkey and Norway shows many characters from very diverse theories. The Heckscher-Ohlin approach focuses on factor endowments and natural resources. In this sense Norway is the capital-abundant country and Turkey is the labor-abundant country. So Heckscher-Ohlin theorem predicts that Norways export bundle will be consisting of capital-intensive goods while Turkey will be exporting labor-intensive goods. As this should be the case, when Turkeys exports to Norway are given a closer look, it is seen that more than 60 percent of these exports are actually capital intensive goods, although Norways exports to Turkey mostly are also capital-intensive goods. Thats why, the trade data regretfully do not fully satisfy the predictions of Heckscher-Ohlin approach despite the fact that Norways exports to Turkey are mostly in line with H-O model. This, practically has to do with almost all the assumptions of Heckscher-Ohlin model. There is a huge technological difference between Turkey and Norway as it was discussed in the section ii. Tastes and preferences are not the same in both the countries and there exist huge transportation costs considering the distance between the countries. Furthermore, characteristics of specialization are not as predictable as they are in the traditional theories due to the fact that economies of scale are realized and some market imperfections exist in many industries. In a same manner, with steadily increasing wages from globally converging factor prices, it is likely that interindustry trade be at least partially substituted by intra-industry trade. Since intra-industry trade is most prevalent for manufactred goods, when the data are checked, it becomes a little bit clearer why there are some inconsistencies between the abundant factors and the exported goods. For example, as it was stated in the third section, electrical, electronic equipments, vehicles other than railway and tramway and ships, boats and other floating structures are manufactured goods and therefore scale economies and product differentiation are important in their production and trade. As this is the case, it had turned out that these three commodity groups were export goods of Turkey rather than Norways. Thats why, intra-industry trade can be useful in reflecting the complexity of the trade pattern between these two countries.

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