Bilateral trade trends and patterns of Bosnia and Herzegovina: Case of trade with Turkey

Abstract

A country's trade pattern reflects its supply (export) and demand (import) specialization indicating national performance and competitiveness in the foreign as well as in the domestic market. By applying two different concepts of trade specialization (one based on traditional trade theories of comparative advantages and the other based on modern trade theories), complemented with the analysis of export-import flows and relations, the paper aims to identify characteristics of the position of Bosnia and Herzegovina (B&H) in its bilateral trade. The paper investigates trends, patterns and variations in the trade of B&H with Turkey during the eleven-year time frame (2009-2019), with special regard to identifying industries with revealed comparative advantages and industries with dominancy of IIT. The analysis employs different indicators such as indices of export composition, sectoral diversification/concentration, IIT intensity and structure, quality of exports and imports based on relative unit values and classification of industries by technological intensity. The research results indicated an unfavourable position of B&H in trade with Turkey, with no prominent changes in the observed period. The trade deficit is constantly present, with low export-import coverage and a declining export trend. The analysis revealed a higher level of export product concentration primarily on low value added products, and comparative advantages of B&H in fewer industries, mainly resource-based or medium-technologically intensive. Trade with Turkey is extremely inter-industry trade, viewed both at an aggregate and industrial level, also pointing to B&H's low competitiveness in analyzed trade relations.