In this study, the effect of export sophistication, EXPY, on the terms of trade and the process of economic growth is examined using time series analysis with structural breaks for 13 product groups in the period of 1995-2015 in Turkish economy. The findings of the analysis indicating the validity of convergence process towards steady-state equilibrium point out that the export sophistication of the higher capital and technology-intensive industries rises economic growth and terms of trade, while the sophistication level of the higher labor and natural resource-intensive industries worsens them. Besides, in times of economic and financial crises, it is observed that economic growth and terms of trade are affected negatively. Therefore, it can be asserted that it is not important for Turkish economy whether foreign trade begins or not, the important thing is what kind of goods Turkey exports.
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