Economic and Social Development

Varazdin Development and Entrepreneurship Agency in cooperation with

University North

Editors: Ilko Vrankic, Daniel Tomic

Economic and Social Development 13th International Scientific Conference on Economic and Social Development

Book of Proceedings

Barcelona, 14-16 April 2016

Varazdin Development and Entrepreneurship Agency in cooperation with

Editors: Ilko Vrankic, Daniel Tomic

Economic and Social Development 13th

International Scientific Conference on Economic and Social Development

Book of Proceedings

Barcelona, 14-16 April 2016

Title Economic and Social Development (Book of Proceedings), 13th International Scientific Conference on Economic and Social Development Editors

Ilko Vrankic, Daniel Tomic

Scientific Committee Marijan Cingula, University of Zagreb, Croatia (President); Ayuba A. Aminu, University of Maiduguri, Maiduguri, Nigeria; Gouri Sankar Bandyopadhyay, The University of Burdwan, Rajbati Bardhaman, India; Haimanti Banerji, Indian Institute of Technology, Kharagpur, India; Alla Bobyleva, The Lomonosov Moscow State University, Russia; Leonid K. Bobrov, State University of Economics and Management, Novosibirsk, Russia; Rado Bohinc, University of Ljubljana, Slovenia; Adnan Celik, Selcuk University - Konya, Turkey; Angelo Maia Cister, Federal University of Rio de Janeiro, Brasil; Mirela Cristea, University of Craiova, Romania; Sreten Cuzovic, University of Nis, Serbia; Oguz Demir, Istanbul Commerce University, Turkey; T.S. Devaraja, University of Mysore, India; Alba Dumi, Vlora University, Vlore, Albania; Ksenija Dumicic, University of Zagreb, Croatia; Galina Pavlovna Gagarinskaya, Samara State University, Russia; Fran Galetic, University of Zagreb, Croatia; Mirjana Gligoric, Faculty of Economics, Belgrade University, Serbia; Mehmet Emre Gorgulu, Afyon Kocatepe University, Turkey; Anica Hunjet, University North, Koprivnica, Croatia; Oxana Ivanova, Ulyanovsk State University, Ulyanovsk, Russia; Irena Jankovic, Faculty of Economics, Belgrade University, Serbia; Lara Jelenc, University of Rijeka, Croatia; Myrl Jones, Radford University, USA; Ana Jovancai, Univerzitet Džon Nezbit, Belgrade, Serbia; Gorazd Justinek, Graduate School of Government and European Studies, Slovenia; Hacer Simay Karaalp, Pamukkale University,Turkey; Dafna Kariv, The College of Management Academic Studies, Rishon Le Zion, Israel; Salih Katircioglu, Eastern Mediterranean University, Northern Cyprus, Turkey; Hilal Yildirir Keser, Uludag University, Bursa, Turkey; Sophia Khalimova, Institute of Economics and Industrial Engineering of Siberian Branch of Russian Academy of Science, Novosibirsk, Russia; Marina Klacmer Calopa, University of Zagreb, Croatia; Vladimir Kovsca, University of Zagreb, Croatia; Goran Kozina, University North, Koprivnica, Croatia; Lejla Lazovic Pita, School of Economics and Business, University of Sarajevo, Bosnia and Herzegovina; Robert Lewis, Les Roches Gruyère University of Applied Sciences, Bulle, Switzerland; Ladislav Lukas, Univ. of West Bohemia, Faculty of Economics, Czech Republic; Pascal Marty, University of La Rochelle, France; Vaidotas Matutis, Vilnius University, Lithuania; Marjana Merkac Skok, Faculty for Commercial and Business Sciences, Celje, Slovenia; Marin Milkovic, Rector, University North, Koprivnica, Croatia; Gratiela Georgiana Noja, West University of Timisoara, Romania; Zsuzsanna Novak, Corvinus University of Budapest, Hungary; Mislav Ante Omazic, University of Zagreb, Croatia; Vera Palea, Universita degli Studi di Torino, Italy; Dusko Pavlovic, President DIU Libertas International University, Zagreb, Croatia; Zeljka Primorac, University of Split, Croatia; Miroslaw Przygoda, University of Warsaw, Poland; Kerry Redican, Virginia Tech, Blacksburg, USA; Katarzyna Szymanska, The State Higher School of Vocational Education in Ciechanow, Poland; Ilaria Tutore, University of Naples Parthenope, Italy; Ilko Vrankic, University of Zagreb, Croatia; Rebeka Danijela Vlahov, University of Zagreb; Thomas Will, Agnes Scott College, USA; Li Yongqiang, Victoria University, Australia; Peter Zabielskis, University of Macau, China; Tao Zeng, Wilfrid Laurier University, Waterloo, Canada; Snezana Zivkovic, University of Nis, Serbia. Review Committee Marina Klacmer Calopa (President); Ana Aleksic; Ayuba Aminu; Josip Arneric; Lidija Bagaric; Tomislav Bakovic; Sanja Blazevic; Leonid Bobrov; Ruzica Brecic; Anita Ceh Casni; Mirela Cristea; Stjepan Dvorski; Robert Fabac; Davor Filipovic; Ivica Filipovic; Fran Galetic; Mirjana Gligoric; Tomislav Globan; Anita Goltnik Urnaut; Tomislav Herceg; Irena Jankovic; Dafna Kariv; Oliver Kesar; Hilal Yildirir Keser; Tatjana Kovac; Vladimir Kovsca; Marjana Merkac Skok; Josip Mikulic; Ljubica Milanovic Glavan; Guenter Mueller; Ivana Nacinovic Braje; Zsuzsanna Novak; Alka Obadic; Claudia Ogrean; Igor Pihir; Najla Podrug; Vojko Potocan; Sanda Renko; Souhaila Said; Armando Javier Sanchez Diaz; Tomislav Sekur; Lorena Skuflic; Mirko Smoljic; Petar Soric; Mario Spremic; Ana Jovancai Stakic; Matjaz Stor; Lejla Tijanic; Daniel Tomic; Boris Tusek; Rebeka Daniela Vlahov; Ilko Vrankic; Thomas Will; Zoran Wittine; Tao Zeng; Snezana Zivkovic; Berislav Zmuk. Organizing Committee Domagoj Cingula (President); Kristina Detelj; Marina Klacmer Calopa; Fran Galetic, Erlino Koscak; Miroslaw Przygoda. Publishing Editor Publisher Copies

Design

Domagoj Cingula Print

Varazdin Development and Entrepreneurship Agency, Varazdin, Croatia University North, Koprivnica, Croatia

100 CDs

ISSN 1849-6903 The Book is open access and double-blind peer reviewed. Our Books are indexed and abstracted by ProQuest, EconBIZ and CPCI (WoS) databases and available for download in a PDF format from the Economic and Social Development Conference website: http://www.esd-conference.com

© 2016 Varazdin Development and Entrepreneurship Agency, Varazdin, Croatia and University North, Koprivnica, Croatia All rights reserved. Authors are responsible for the linguistic and technical accuracy of their contributions.

CONTENTS

Globalization and Challenges of the Modern World

Esra Balli, Mehmet Fatih Tras, Ciler Sigeze IMPACT OF OIL PRICE ON TURKISH MACROECONOMIC VARIABLES ...................................................................................2 Samson Davoyan, Armen Ktoyan, Ani Khachatryan THE ASSESSMENT OF THE CONSTITUTIONALISM OF COUNTRIES WITH THE HELP OF THE INTEGRAL INDEX ..................................................................................................................................10 Rungsan Suwannahong FACTORS AFFECTING THE STUDENTS’ HEALTH FROM USING SMART PHONES IN THAILAND .................................................... 17 Ivana Bestvina Bukvic, Dubravka Pekanov Starcevic, Ivana Fosic ADEQUACY OF THE CAPM FOR ESTIMATING THE COST OF EQUITY CAPITAL: EMPIRICAL STUDY ON UNDERDEVELOPED MARKET .......................................................... 25 Farah Naz CAPABILITYES AND HUMAN WELL-BEING: HOW TO BRIDGE THE MISSING LINK? ................................................................................................ 36 Valentina Kirinic, Melita Kozina, Violeta Vidacek-Hains ACCESSIBILITY OF INFORMATION: INTERNATIONAL STANDARDS, RECOMENDATIONS AND PRACTICES ............................................................................................................... 47 Varun Pandit, Brahma Deo, Praveen Kulshreshtha CAN UNPREDICATABILITY BENEFIT AN INEFFICIENT FIRM? ......................................................................... 57 Kamel Si Mohammed THE RELATIONSHIP BETWEEN DEMOCRACY AND CORRUPTION IN MENA COUNTRIES ................................................................... 67 Maris Pukis LOCAL DILEMMA ABOUT LIBERALISATION OR INTERVENTION .................................................................................................................................... 73 Mirjana Gligoric, Irena Jankovic THE IMPACT OF REMITTANCES ON ECONOMIC GROWTH AND ACCESS TO FINANCE ............................................. 81

Petar Kurecic, Binoy Kampmark A MULTIFARIOUS, MULTIFACETED APPROACH TO THE MULTIPOLAR WORLD: A NECESSITY.............................. 90 Sema Ay, Elif Karakurt Tosun, Hilal Yildirir Keser ULUDAG WINTER TOURISM AND ITS IMPORTANCE IN THE ECONOMIC DEVELOPMENT......................... 101 Stefan Komazec, Ivan Todorovic, Milos Jevtic ANALYSIS OF MSME ECOSYSTEM IN SERBIA AND IDENTIFICATION OF KEY STRATEGIC SECTORS FOR ITS DEVELOPMENT ..................................................................................................... 112 Sureerut Inmor THE ADOPTION OF FACEBOOK FOR EDUCATIONAL PURPOSES IN THAILAND ..................................................................................... 121 Susana Martins, Milena Carvalho HOW DO ESEIGS´ FACULTY AND LIBRARIAN WORK TOGETHER IN ORDER TO PROMOTE STUDENTS’ KNOWLEDGE MANAGEMENT SKILLS? ...................................................................................... 131 Tea Lovrinovic, Martina Nakic THE IMPACT OF EU FUNDS ON THE DEVELOPMENT OF TRANSITION ECONOMIES ................................................ 142 Nelly Popova

PERSONAL INCOME TAX SYSTEM IN BULGARIA ................. 152

Mirza Nesibe THE IMPACT OF CULTURAL HERITAGE ON SUSTAINABLE TOURISM DEVELOPMENT: THE CASE OF PERGAMON .................................. 161 Mehmet Fatih Tras, Kenan Lopcu, Fela Ozbey IS TURKEY BREAKING THROUGH THE MIDDLE INCOME TRAP? - AN EMPIRICAL INVESTIGATION ................. 162 Kristina Afric Rakitovac, Matea Tadic PROMOTING SUSTAINABLE CONSUMPTION THROUGH HIGHER EDUCATION ........................................... 172 Filip Chybalski DOES THE RELATION BETWEEN STATE AND MARKET AFFECT THE RETIREMENT AGE? A CROSS-SECTION STUDY FOR OECD COUNTRIES ............................................................................................................ 183 Vedran Kruljac, Bozo Skoko THE REQUIREMENTS AND OPPORTUNITIES FOR PROMOTION OF CROATIAN HEALTH TOURISM .............................................. 193

Vesna Bucevska MODELLING MIGRATION FROM THE EU CANDIDATE AND POTENTIAL CANDIDATE COUNTRIES TO THE EU MEMBER STATES ......... 203 Victor Ojakorotu, Olutola Oluwole Idowu FEMINISATION OF OIL-RESOURCE CRISIS IN NIGER DELTA IN NIGERIA ................................................................. 213 Vlatka Bilas, Mile Bosnjak, Tomislav Cizmic RELATIONSHIP BETWEEN RESEARCH AND DEVELOPMENT AND ECONOMIC GROWTH IN THE EU COUNTRIES ............................................................................................................ 223 Franciszek Kapusta, Rafal Parvi EGG MARKET IN POLAND AT THE BEGINNING OF THE XXI CENTURY.......................................................................................... 231 Hilal Yildirir Keser, Sema Ay COMPARATIVE ADVANTAGE OF TURKEY IN FREIGHT TRANSPORTATION SECTOR : IN COMPARISON WITH BRIC COUNTRIES ............................................................................................................ 242 Hrvoje Jakopovic, Bozo Skoko PASSENGERS' TRUST IN INFORMATION SOURCES: EXAMPLES OF CROATIAN TRANSPORT ORGANIZATIONS ........ 252 Ines Kersan-Skabic HOW TO MEASURE DEBT SUSTAINABILITY IN DEVELOPED COUNTRIES? A COMPARISON OF DIFFERENT APPROACHES ......................................................................................................... 265 Grzegorz Grabowski THE DEVELOPMENT ASSISTANCE OF THE UNITED KINGDOM TO INDIA IN THE YEARS 1991 - 2014 ............................................... 276 George Paraskevas, Thomas Hatzigayos THE ROAD VISUAL INSPECTION MECHANISMS OF THE FREIGHT ROAD TRANSPORTS IN THE EUROPEAN UNION FROM A LEGAL AND ECONOMIC PERSPECTIVE................................ 286 Aylin Erdogdu ASSESSING THE IMPACT OF NON-PERFORMING LOANS ON ECONOMIC GROWTH IN TURKEY ...................................................................... 309 Candida Bussoli, Lavinia Conca, Marisa Gigante, Giuseppe Madaro DETERMINANTS OF IMPAIRED LOANS AND DOUBTFUL LOANS IN ITALY ...................................................................................................................... 317 Daniel Francois Meyer FORMULATION AND TESTING OF A LOCAL ECONOMIC DEVELOPMENT POTENTIAL ASSESSMENT TOOL ..................... 319

Cem Berk THE ROLE OF REAL ESTATE DERIVATIVES IN HEDGING REAL ESTATE: AN EMPIRICAL ANALYSIS OF THE U.S. COMMERCIAL MARKET 331 Nan-Yu Wang, Sen-Sung Chen, Chih-Jen Huang, Shih-Heng Hsiao ASEEMINGLY UNRELATED REGRESSION ANALYSIS ON THE TRADING BEHAVIOR OF MUTUAL FUND INVESTORS ................................................................................ 340 Ayed Al Muala THE EFFECT OF SERVICE QUALITY DIMENSIONS ON CUSTOMERS’ LOYALTY THROUGH CUSTOMER SATISFACTION IN JORDANIAN ISLAMIC BANK ............................................................................... 348 Asli Guler THE FLEXIBILITY OF THE INFLATION TARGETING SYSTEM: A DYNAMIC PANEL DATA ANALYSIS WITH FRAGILE ECONOMIES ............... 355 Ashot Davoyan THE ASSESSMENT OF THE COMPARATIVE EFFICIENCY OF REFORMS OF COUNTRIES WITH THE HELP OF FACTOR ANALYSIS............ 364 Andjelko S. Lojpur, Ana Lalevic-Filipovic REINDUSTRIALISATION AS THE BACKBONE OF THE NEW DEVELOPMENT PARADIGM IN TRANSITION COUNTRIES ............................................................................................................ 371 Anica Hunjet, Martinia Ira Glogar, Djurdjica Parac Osterman, Goran Kozina THE IMPORTANCE OF COLOR AS A MARKETING TOOL IN TOURISM ................. 382 Anna Olofsson, Susanna Ohman, Katarina Giritli Nygren RISK AS A DRIVING FORCE OF CONTEMPORARY SOCIETIES, ECONOMY & POLITICS ............... 389 Ashok V. Giri THE ROLE AND IMPACT OF E-COMMERCE ON CONSUMER BEHAVIOUR ........................................................................................................... 390 Blazenka Micevic EFFICIENT AGRICULTURAL LAND MANAGEMENT IN REPUBLIC OF CROATIA: DREAM OR REALITY? .............................................. 401 Ana Lalevic Filipovic, Selma Demirovic FINANCIAL STRUCTURE OF STOCK COMPANIES IN MONTENEGRO IN THE FUNCTION OF PROFITABILITY ..... 408 Derya Ozturk, Ebru Onurlubas FAST FOOD CONSUMPTION HABITS OF YOUNG PEOPLE .................................................................................................................... 417

Dilmurod Nasimov COMPARATIVE ANALYSIS OF EMPLOYMENT TENDENCIES IN THE CIS COUNTRIES ............................................................... 427 Ebru Canikalp, Ilter Unlukaplan, Muhammed Celik ESTIMATING VALUE ADDED TAX GAP IN TURKEY ............................................................................................ 437 Ebru Onurlubas KNOWLEDGE LEVELS OF THE CONSUMERS ABOUT ECOFRIENDLY PRODUCTS IN EDIRNE - KESAN DISTRICT SAMPLE ................... 446 Edyta Marcinkiewicz THE CHANGING LANDSCAPE OF VOLUNTARY PENSIONS IN THE CEE REGION .......................................................................... 455 Daniel Francois Meyer SOLUTIONS FOR ECONOMIC DEVELOPMENT IN RURAL REGIONS: THE CASE OF THE NORTHERN FREE STATE REGION .... 466

Enterprise in Turbulent Environment

Rizwana Kosar, Sayyed M. Mehdi Raza Naqvi PSYCHOLOGICAL EMPOWERMENT AND EMPLOYEE BEHAVIORS EMPLOYEE ENGAGEMENT AS MEDIATOR AND LEADER-MEMBER EXCHANGE AS MODERATOR ....... 485 Tuomas Ranti, Mikko Gronlund, Thommie Burstrom FINNISH HIGH-IMPACT ICT SMES AND ECOSYSTEMS..................................................................................... 496 Peter Podgorelec, Sasa Prelic THE AUDIT COMMITTEE INFORMATION SOURCES: A DISADVANTAGE OF THE TWO-TIER SYSTEM .......................... 507 Sanja Rocco, Aleksandra Pisnik THE CONCEPTUAL FRAMEWORK FOR INTEGRATING MARKET AND DESIGN ORIENTATION WITHIN MARKETING ........................................................................................................... 515 Onur Akpinar FACTORS AFFECTING CAPITAL STRUCTURE: A PANEL DATA ANALYSIS ON BORSA ISTANBUL....................................................................... 526

Melita Kozina, Anamarija Barun IMPLEMENTATION OF THE BUSINESS IMPACT ANALYSIS FOR THE BUSINESS CONTINUITY IN THE ORGANIZATION..................................................................................................... 534 Jana Skoludova HUMAN CAPITAL MANAGEMENT: MONITORING OF THE INTERRELATIONSHIPS CO-WORKERS IN ORGANIZATIONS IN THE CZECH REPUBLIC ............................................................................................................... 544 Hasan Aksoy, Erol Cengiz INNOVATION BEHAVIOUR AND R&D PERFORMANCE OF SMES: THE MODERATING EFFECT OF REGIONAL DYNAMISM ............................................................................................................ 549 Ozgur Ergun, Serap Capuk THE EFFECTS OF PERCEIVED SERVICE QUALITY FOR CUSTOMER LOYALTY IN AIRLINES .......................................................... 560 Askin Keser, Gozde Yilmaz IMPACT OF JOB SATISFACTION (JS) FACETS ON INTENT TO LEAVE (ITL) FOR HUMAN RESOURCES EXPERTS (HRE): A STUDY FROM TURKEY ...................................................................................................... 568 Abdulaziz Eshwaish, Wisam Neema Hussein, Zead Mshhain Abdullah ACCOUNTING RESPONSIBILITY – ENHANCING ITS ROLE IN RISK MANAGEMENT – AN EMPIRICAL STUDY OF A TRADE BANK OF IRAQ ...... 574 Onur Akpinar, Ihsan Yigit THE RELATIONSHIP BETWEEN DIVERSIFICATION STRATEGY AND FIRM PERFORMANCE IN DEVELOPED AND EMERGING ECONOMY CONTEXTS: EVIDENCE FROM TURKEY, ITALY AND NETHERLANDS ...................................................................................................... 582

Entrepreneurship Caught Between Creativity and Bureaucracy

Maja Klindzic, Sanda Rasic Jelavic, Ivana Nacinovic Braje OVERVIEW OF THE OBSTACLES AND FACILITATORS OF LEARNING AND ACQUIRING KNOWLEDGE IN STRATEGIC ALLIANCES – AN EMPIRICAL STUDY ........... 593 Ciler Sigeze, Esra Balli, Mehmet Fatih Tras THE RELATIONSHIP BEETWEEN R&D AND EXPORT DECISION OF TURKISH FIRMS ......................................... 604

Jaan Alver, Lehte Alver ON SOME IDEAS FOR IMPROVEMENT OF IDENTIFICATION AND RECORDING GAINS/LOSSES ....................................... 610 Alexia Franzidis ASSESSING THE VIABILITY OF ADOPTING CORPORATE SOCIAL RESPONSIBILITY PRACTICES IN SME TOURISM AND LODGING FACILITIES ............................................................................................................. 620 Hasan Aksoy, Erol Cengiz INNOVATIVE MARKETING IN SMEs AND LARGE SCALE ENTERPRISES: GAZIANTEP SAMPLE .................................................... 622 Richard Gardiner, Petr Hajek THE ROLE OF INNOVATIVE SMES TO THE GROWTH OF REGIONAL ECONOMY: THE CASE OF CZECH REPUBLIC ....... 629 Davor Perkov, Dinko Primorac, Goran Kozina BUSINESS NEGOTIATION AS A CRUCIAL COMPONENT OF SALES ..................................................................... 637

13th International Scientific Conference on Economic and Social Development Barcelona, 14-16 April 2016

Globalization and Challenges of the Modern World

1


COMPARATIVE ADVANTAGE OF TURKEY IN FREIGHT TRANSPORTATION SECTOR : IN COMPARISON WITH BRIC COUNTRIES Hilal Yildirir Keser PhD., Uludağ Üniversitesi SBMYO Uludag University Vocational School of Social Sciences Sema Ay Assoc.Prof.(PhD), Uludağ Üniversitesi SBMYO Uludag University Vocational School of Social Sciences ABSTRACT Technological developments, increase of the international competition, reduction of the transportation costs and tariffs cause the realization of each process in a different country by dividing the production activities into smaller sub-processes having different factor intensity. This case increases the importance of the services sector, especially of the logistics and transportation services which have significant share in the services sector. Turkey with the geograghical position advantage it has being located on the intersection of the international transport corridors passing through Europe and Asia creates an important force of competition in the transportation sector. Starting from this idea, in the study, it has been aimed to reveal the competitiveness of the transportation sector in Turkey with the RCA (Revealed Comparative Advantage) index. In addition to this, the comparison of the competitiveness of the transportation sector which has gained importance with recently increased trade volume in Brazil, Russia, India and China which are referred to as BRIC countries has been aimed. In terms of international competitiveness, it is thought that the comparative analysis with these countries will play a guiding role in determination of the policies towards the future. In this context, firstly, the issues of competitiveness and comparative advantage will be mentioned and then, the general situation analysis of the transportion sector in Turkey and the BRIC countries will be included. Finally, assessments will be made by calculating the RCA index related with the transportion sector for Turkey and the BRIC countries. Keywords: Transportation Sector, Competitiveness, BRIC 1. INTRODUCTION Transportation sector has been the sector which has been affected by the impacts of globallization. The growing volume of trade every other day forces the exported or imported goods to be transported in a most cost-effective and fastest way. Providing the transport services cost-effectively has been the essential condition of achieving competitiveness in other industrial sectors as well as the transportation sector strengtens the competition in itself. The transport infrastructure is of great importance in order to be able to have competitive advantage in the transportation sector. Having adequate seaport, airport, highway and railway in a country and their effective use, and also its geographical location enabling all types of transportation are considerd to be the basic requirements in achieving the competitive advantage. The developing countries have started to pay more attention to the improvement of their transportation sectors along with their increasing trade volumes. The transportation services have recently become important for Turkey and the BRIC countries (Brazil, Russia, India and China) standing out as the fastest growing economies among the developing economies. The volume of the transportation services export in these countries is in a general trend of increase. However, this increase does not mean to have competitiveness. Being able to have the 242


competitiveness requires the ability of providing the existing export of trasportation services in fast, quality and cost-effective way. Within the framework of this requirement, the aim of the study is to measure the competitiveness of the transportation sector for Turkey and the BRIC countries and to make a comparative analysis. In the study, primarily, after giving a brief theoretical information about competitiveness and comparative advantage, the aassesment of the general situation of the transportation sector in Turkey and the BRIC countries will be included. Then, the comparison of competitiveness of the transportation sector will be made by calculating the Revealed Comparative Advantages-RCA indexes of Turkey and the BRIC countries.

2. COMPETITIVENESS AND COMPARATIVE ADVANTAGES The disappearance of the borders with globalization has led many countries to join the world trade by exporting the goods with similar features and to the increase of competition in the international arena. The countries which have products competitive in the world markets have had significant shares in the world trade. At this point, the concept of "competitiveness" has gained importance and has been a general term used to refer to the share that a country owns in international trade of goods or services. (Düzgün, 2007) Competitiveness is seen as the key to success in national and international arena. There are many benefits that an economy with high competitiveness will obtain at micro and macro levels. Firstly, the competitiveness , especially on productivity, causes poisitive impacts on the economic performance of the country. Secondly, it enables to be open to the international economic activities, to get integrated with the world, to achieve high living stantards and to maintain the achieved standard. Thirdly, that the state makes the arrangements which will help healthy functioning of the competition environment provide flexibility for the economy in adaptation to the changing international environment. (Aktan and Vural, 2004) In fact, the competitiveness is essentially based on the Absolute Advantages Theory of A. Smith and Comparative Advantages Theory of D. Ricardo. With the Absolute Advantages Theory, Adam Smith (1766) has argued that the countries need to export the goods and the services which they can produce more cheaply and import the ones which they produce more expensively. The first contribution of Ricardo to the theory is not related with the prices between the self-produced goods and services; it is related with the necessity of conducting foreign trade by taking the relative sense price differences of a goods or services compared to the goods and services in another country as the basis. The Comparative Advantages Theory put forth by Ricardo (1817), has focused on why a country should specialize on the export of certain categories of goods and services and should import the others. According to the Comparative Advantages Theory, a country should export the goods that it is relatively able to produce cheaper (with less per unit labor cost ) compared to its trade partners, should import the ones that it is relatively able to produce more expensively (with higher per unit labor cost). In this case, the revenues obtained from the foreign trade will both maximize the prosperity of the country and will lead to an increase in the world economic welfare through the free trade (Sharma, 2004). While Ricardo who put forth the comparative advantages which is the determinant of the international trade has emphasized mostly the physical and natural effects in theory, the subsequent economists have focused mostly on the factor equipment, technology and human factor. During process starting with Ricardo and extending up to Mill, Marshal, Heckscher-Ohlin and contemporary economists, the theoretical development of comparative advantages have continued (Goldin, 1990). During this process, the economists while postulating that free trade would provide contribution to the economic prosperity, they have essetially based their opinions on the comparative advantages theory, and stated that the revenues to be obtained from the international foreign trade would be a key to increasing the economic welfare and that the faster economic growth would be realized by taking the comparative advantages into consideration. (Bernhofen, 2005, Masters, 1995). 243


Since the price and non-price variables determining the comparative advantages in determination of the comparative advantages of a country compared to other countries or group of countries cover a great number of countries and a great number of goods, it has been necessary to make calculations based on the post-trade data in calculating the comparative advantages. In this direction, the first step was put forth by Leisner (1958) in his article article titled "The European Common Market and British Industry” (Liesner, 1958:302-311). However, the index developed for comparing the competitiveness of England with the Common Market Countries has been made functional by Balassa (1965) (Erkan, 2012: 198). The RCA approach of Balassa (1965) assumes that the real form of comparative advantages can be extracted from the posttrade data. Balassa, for calculating the comparative advantage of a country on a particular goods or in its industrial trade, has developed an index rendering the ratio of the share of this goods or industry in the total world export to the share in total export of the country. The aim here is to be able to determine whether or not the country has comparative advantage rather than determining the resources lying under the comparative advantage. (Yalçınkaya et.al, 2014; Seymen, 2009:237; Erkan, 2012) 3. COMPARATIVE ADVANTAGE OF FREIGHT TRANSPORTATION SECTOR IN BRIC COUNTRIES AND TURKEY The basis of the comparative advantage essentially depends on the relative cost variations of a goods or services. One of the most important factors of that the freight transport sector has comparative advantage is the transportation infrastructure existing in that country. The advanced technology transport vehicles to ensure the effectiveness of the transport systems, the number of the sea ports and large transaction volumes of these ports, wide highways, railway networks, efficient airports have been affecting the development of the transportation sector and have been enabling the higher quality service to be offered at a lower cost. With an overall look, it is seen that the countries which have strong infrastructure and where the transportation facilities can be easily improved vave more advantage compared to the other countries. (Öztürk ve Uzun, 2010:95) The most important factor effective in the increase of the freight transportation is the intensity of the foreign trade in that country. The demand for transportation services increases along with the increase in the volume of foreign trade, the increased demand triggers the sector to gain power by strengtening the infrastructure of the sector. Indeed, policies towards increasing the advantages owned by the sector by giving priority to the private and public-based infrastructure investments as the result of the increased foreign trade volume in the BRIC 1 countries which recently have the highest growth rate and which are today among the strongest economies. On the other hand, the advantage of Turkey in the transportation sector due to the existing geographical location advantage has increased especially after the year of 2015 with private and public infrastructure investments. Within the scope of Global Competitiveness Index published annually by WEFORUM, the situation of the countries in the transportation infrastructure has been presented. Table1 shows the situation of the overall transport infrastructure of Turkey and the BRIC countries according to WEFORUM.

1

The BRIC description consists of the initial letters of the countries Brazil, Russia, India and China was first offered by economist Jim O'Neill. The BRIC countries are regarded as the fastest growing, rising markets in the world economy. It is of particular importance due to the fact that the total surface area of the BRIC countries covers more than one fourth of the surface of the world and their population consists of the 40 percent of the world population. (Goldman Sachs, 2001;Narin ve Kutluay, 2013: 41). In "Dreaming with BRICs” published by Goldman Sachs in 2003, it is foreseen that in the year of 2015, the world's largest economy will be China, the largest econmy will be India, the fourth largest economy will be Brazil and sixth largest economy will be Russia. Meanwhile, it is also noted that China and India will be global actors in the manufacturing and services sectors, and Brazil and Russia in the raw materials sector. (Goldman Sachs, 2001; Sandalcılar, 2012)

244


Table 1. Quality of Overall Transport Infrastructure of Turkey and the BRIC Countries

Source: WEFORUM, 2016 When compared with the BRIC countries, it can be said that Turkey is in better condition in the transport infrastructure. That Turkey geographically is located on the point of intersection of the continents of Asia, Europe and Africa and that it is on the route of the international corridors already provides a significant advantage. In addition to this, the importance given to the transport infrastructue investments has been an importatnt factor in the improvement of the transport sector. In the current situation, China comes in the first row among the BRIC countries and Russia, India and Brazil follow respectively. The Logistics Performance Index (LPI) published by the World Bank biannually presents the situation and improvement of the countries in the transportation and logistics sectors. As seen on Table 2, China takes the first row in terms of logistic performance when compared with Turkey and the BRIC countries. Turkey follows China very closely in the general LPI value of 2012 and 2014. The “International Shipment” which is one of the sub-indexes included within the scope of the Logistics Performance Index indicates the effectiveness of the freight transportation services and provides information about the development of the sector. On the basis of this sub-index, China ranks the first row. Table 2. The LPI values of Turkey and the BRIC Countries

Source: Worldbank, 2016 When the transportation services export values of Turkey and the BRIC countries are examined, as seen on Figure 1, it is seen that China comes in the first row with large margin. The freight transportation services are intensively dependent on the foreign trade. The more the export and import volumes of the goods increase, the more the demand for the freight transportation increases. That China has recently begun to get significant share in the world trade is characteristics to account for the reason why the export of transportation services is so high. Especially, fulfilling large amount of maritime transpot has significantly increased the export of the freight transportation during past decade.

245


Figure 1. Export of Transportation Services of Turkey and the BRIC countries. 4,5E+10 4E+10 3,5E+10 3E+10 2,5E+10 2E+10 1,5E+10 1E+10 5E+09 0

Brazil Russia India China

Turkey

Source: WTO, 2016 In the export of transportation services, Russia, India, Turkey and Brazil follow China respectively. With an overall look, it can be said that the export of transportation services in Turkey and the BRIC countries is in an evidently ascending trend during the past decade. 4. MEASURING THE REVEALED COMPARATIVE ADVANTAGE (RCA) OF FREIGHT TRANSPORTATION SECTOR FOR TURKEY AND THE BRIC COUNTRIES The Revealed Comparative Advantage (RCA) approach is one of the methods frequently used in measuring the comparative advantages (competitiveness). In the studies included in the literature, it is seen that RCA is generally used for measuring the competitiveness related to the markets for goods. However, the studies for measuring the competitiveness of the services sector and especially of the transportation sector have not been encountered very much. Kuznar (2007) has used the Balassa index in his study that he carried out in order to determine the competitivenes of the developing countries in the international services trade, and reached the conclusion that the economies with low and medium income levels have higher competitivieness. Hısanaga (2007), has reached the conclusion that the US has a strong competitiveness in the knowledge-based services, especially in the category of Royalties and License Fees in his study that he conducted on transportation, communication, finance, royalties and license fees, personal, cultural, and recreational goods, computer and information, and other business services. Seyoum (2007), has examined the competitivness in the trade, finance, transportation and travel services in the developing countries and consequently stated that the developing countries have more competitive structure especially in the transportation and travel services. Muhammadi and Yaghoubi (2008) have reached a similar conclusion in the study they have conducted. In the study they have conducted on computer and information, finance, transportation, and travel services in the developing countries, they have expressed that most of these countries have comparative advantage in the torism and transportation sectors. Marjan et.al. (2008), in their studies, have explained the comparative advantage of Slovania in transportation services compared with Eropean countries by using the Balassa index. Fourie and Fintel (2009), in their study conducted on transport, travel, communications, insurance, financial services, computer and information, royalties other business services, personal, cultural and recreational services, have reached the conclusion that Greece, Denmark, Egypt, and Norway have strong comparative advantage in the export of transportation services. Gümüş and Hızıroğlu (2015) in their study, have compared Turkey with the selected European countries in the selected services sectors within the framework of different RCA indexes and 246


Porter's Diamond Model approach. As conclusion, they have stated that Turkey has strong comparative advantage in the construction, tourism and transportation sectors. 4.1. Aim of the Study The aim of the study is to measure the competitiveness of Turkey and the BRIC countries of which economies are rapidly growing and also make a comparative analysis of their competitiveness. In this way, it is aimed to make comparisons and assessments on the issue of competitiveness of these countries showing economic similarity with Turkey in the export of transportation services along with their competitiveness in the other industrial sectors and foreign trade. 4.2. Data and Method In the study, the RCA (Revealed Comparative Advantage) index developed by Balassa (1995) has been used in order to reveal the competitiveness of the BRIC countries and Turkey in the transportation sector. The RCA index is formulated as follows: RCAij = (Xij / Xit) / (Xwj / Xwt) In case of RCAij > 1, the share of the goods k (sector) of the country j during the period t is greater than its share in the world's total export during the same period. The country has the revealed comparative advantage in mentioned product (sector) and has been specialized. In case of RCAij < 1, the share of the goods k (sector) of the country j during the period t is smaller than its share in the world's total export during the same period. The country has been specialized in the mentioned product (sector) and does not have the revealed comparative advantage And In case of RCAij = 1, the share of the goods k (sector) of the country j during the period t is equal to its share in the world's total export during the same period. The level of specialization of the country is the same as the world’s specialization. (Hinloopen and Marrewijk 2000). Hinloopen and Marrewijk (2000) has classified the RCA Index in four seperate categories in order to demonstrate the power of the comparative advantage between the countries.These categories are as shown in Table 2. Table 3. RCA Classification Class Class A Class B Class C Class D

RCA Index Value 0 < RCA index ≤ 1 1 < RCA index ≤ 2 2 < RCA index ≤4 4 < RCA index

Situation Without Comparative Advantage Weak Comparative Advantage Medium Comparative Advantage Strong Comparative Advantage

Source: Hinloopen and Marrewijk (2000) ; Erkan (2012) In the calculation of the RCA Index, the total export figures and transportation service export figures for Turkey and the BRIC countries and the world total export and transportation service export figures between the years 1994 and 2013 have been used on annual basis. The data related with foreign trade have been compiled from the data of the World Trade Organisation (WTO). 4.3. Findings In the study, according to the RCA index, ıf Turkey and the BRIC countries are considerd together, Turkey is the country which has the most competitiveness. As seen on Figure 2, Turkey is followed by India, Russia, Brazil and China respectively.

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Figure 2. RCA of Turkey and the BRIC Countries 1,8000 1,6000 1,4000 1,2000 1,0000 0,8000 0,6000 0,4000 0,2000 0,0000

Brazil Russia India China Turkey

When the degree of the comparative advantages of the countries in the current situation is examined on Table 4, according to the Hinloopen and Marrewijk (2000) classification, it is seen that, despite their high rate of economic growth, the BRIC countries do not have comparative advantage in the transportation sector, and the comparative advantatge that Turkey has is weak. The transportation infrastructure is especially of great importance in the comparative advantage of the transportation sector. The inadequate infrastructure prevents the countries from using their existing potential and impede the development of the sector. Table 4. The Current Comparative Advantage of Turkey and the BRIC Countries in Transportaton Sector Brazil Russia India China Turkey

Current RCA Index

Current Situation

0,4844 0,8883 0,9270 0,4370 1,5915

Without Without Without Without Weak

The foreign trade in Turkey has been remarkably increasing irecently and the presence of the region in the global trade has been increasingly stronger. It is expected that its share which was approximately 1.1% in the global trade volume of Turkey in 2014 should exceed 1.5% until 2015. This situation increases the importance of the transportation sector. The advantageous geographical location of Turkey which provides opportunity for easy access to Eastern Europe, Central Asia, Middle East and Northern Africa makes the country to function as a base in the region where freight transportation of which value exceeding 2 trillion US dollars has been realized. The public and private infrasturcture investments made in the past decade has significantly increased the effectiveness of the transportation services. Many new airports have been built, two-way roads have been started to be used all over the country, the high-speed train network has begun to reach to the cities, and the capacity of the Turkish ports has increased. Ambitious targets have been set towards strengthening the transportation infrastructure even more and increasing the competitiveness of the sector. There are major shortages in the physical infrastructure of Brazil regarding highways, ports and and airports and efforts for improvement have been continued. Brazil has a railway network of 30,000 km in length which is not considered to be effective. Railways are cheaper compared to road transport. The 25% of the freight transportation is carried out by railway. Brazil has a great 248


potential in terms of river and sea transport with 7000 km. coast line in length and 48,000 km of river line. In addition, it carries out the export of goods through its 46 ports. The ports which are usually managed by the state are operated by the private sector, and the efforts for modernaziation have been continued. Its air transport is prominent due to the wide lands it owns, and comes in the first place in the world civil aviation sector. Despite the observance of fall in the prices along with the recently made regulations the air transport is expensive. Russia is a country with a large surface area. This situation becomes a disadtvantage in terms of transportation due to the reason of great distances between the labor, natural resources and business centers. On the other hand, that most of the rivers in the country flow in the northsouth direction and not in the east-west direction complicates the access to the sea. Because of these reasons, the transportation costs in the country is 3 times higher than the average international costs. The rail transport and air transport are extensively used in Russia. However, the deficiencies relating to the transport infrastructure in Russia prevent the country from using its potential power for this sector and limit its competitiveness. India has the largest railway network of the world with 63.300 km. Indian railways employ 1.4 million people and is the largest civillian employer of the world. The railway sector has not been able to achieve improvements due to the lack of investments, low prices and inadequate reforms. Importance has been recently begun to be given to the highway network which is inadequate. Highways have been carrying the 70% of the total freight transportation and the 85% of the total paseengers. Most of the 3.3 million km of road is inconvenient and uncaredfor. India has 12 major ports. These major ports have been realizing the 75% of the total freight transportation. The ports of India have been operating inefficiently. The 90% of the trade in India is carried out through the ports. The ports require expanding investments because of the the reason that the foreign trade has grown more than 20% per year since 2002. China has a significant share in the world trade and has been increasing its competitiveness in many sectors. However, the lack of inrastructure in its current situation prevents it from gaining competitiveness in the transportation sector. It is estimated that the transportation infrastructure in China can only meet the 60% of the demands. In China where the 90% of the international trade is carried out by seaways, the port infrastructure is especially of great importance. However, the insufficient number of ports and that most of the available ones cannot be utilized effectively, the lack of railway network, the lack of materials, advanced technology and trained personnel in the airway transportation are considered as obstacles in China's obtaining competitive advantage in the transportation sector. 5. CONCLUSION Depending on the increase in the trade volume and competition in the world economy, the transportation sector has also started to develop rapidly. The development of the transportation sector is inevitable in the countries which have significant shares in trade. When the export of transportation services in the BRIC countries and Turkey which are expressed as the fastest growing economies of the last period, a general upward trend is observed. While China takes the first place in the export of transportation services, Russia, India, Turkey and Brazil follow China respectively. Turkey is in the first place in terms of the adequacy of the infrastructure investments. China, Russia, India and Brazil follow Turkey respectively. When it is considered in terms of effectiveness of the international transportations regarding the services and the prices, China is again in the first place, and this time, India, Turkey, Brazil and Russia are follow China respectively. In this regard, it can be stated that the Chinese transportation sector is a pioneer among the BRIC countries and in Turkey. According to the RCA (Revealed Comparative Advantage) indexes of the stated countries, the RCA index of China for the year of 2005 has been calculated as 0.43, and the conclusion that it does not have the competitiveness has been reached due to 249


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