Does Innovativeness Matter for International Competitiveness in Developing Countries? The Case of Turkish Manufacturing Industries

I. Introduction. - II. Evolution of the Theory of International Trade: Attitudes towards the Technology Factor and the Schumpeterian Viewpoint as a Rationale for Studies at the Firm-Level. - III. A Survey of Firm-Level Studies on the Determinants of Export Performance with an Emphasis on Technology Factor. - IV. Technological and International Competitveness of the Turkish Manufacturing Industry. - V. Determinants of International Competitveness: Estimation Results. - VI. Concluding Remarks.Innovation, R&D, International Competitiveness, Exports

Does foreign ownership matter for survival and growth? Dynamics of competition and foreign direct investment

Foreign direct investment has been considered for a long time as an important channel for transfer of technology to developing countries, and an important tool to generate jobs in those countries. Multinationals bring the factor that developing countries need most, capital, and therefore, they may also help to ease the unemployment pressure created by a rapidly growing (urban) population. It is shown by many researchers that foreign establishments are much more productive than domestic firms, but the empirical evidence regarding technology spillovers is not unambiguous. In this paper, we suggest that the impact of foreign direct investment on local industry hinges on the dynamics of foreign and domestic establishments, i.e., entry, selection (exit), and growth processes. Our analysis on foreign and domestic establishments in Turkish manufacturing industry for the period 1983-96 indicates that foreign establishments have a better performance level than domestic ones when they are first established in the local market, and have a higher survival probability. However, when the establishment characteristics are controlled for, domestic establishments have the same survival probability, but achieve lower rates of employment growth in the early post-entry period.Turkey, foreign direct investment, firm dynamics, entry, exit, growth

Integration with the Global Economy: The Case of Turkish Automobile and Consumer Electronics Industries

This paper aims to contribute to the extensive study of the World Bank Commission on Growth and Development by a case study of the Turkish automotive and the consumer electronics industries. Despite a macroeconomic environment that inhibits investment and growth, both industries have achieved remarkable output and productivity growth since the early 1990s and played a critical role in generating employment and fostering growth. Although there are similarities between the performances of automobile and consumer electronic industries, there seems to be significant differences between their structures, links with domestic suppliers, technological orientation and modes of integration with the global economy. The automobile industry is dominated by multinational companies, has a strong domestic supplier base, and has seized the opportunities opened up by the Customs Union by investing in new product and process technology and learning. The consumer electronics industry is dominated by a few, large domestic firms, and has become competitive in the European market thanks to its geographical proximity, productive domestic labor, and focus on a protected and technologically mature CRT color television receivers segment of the marker, which also helps explain the recent decline in industry’s fortunes. It is without doubt that these industries could have performed even better had governments in Turkey adopted more responsive macroeconomic policies. It is certain that governments could be more responsive only if far-reaching political/institutional reforms are undertaken by changing the Constitution, and current political party and election laws in order to establish public control over the political elites.Macroeconomic policies; automobile industry; consumer electronics industry; political elites; political reforms.

Subcontracting dynamics and economic development: A study on textile and engineering industries

Recent studies on small and medium sized establishments emphasize the importance of networking and regional clusters for industrial development. This study is focused on an important form of cooperation between firms: subcontracting relationship. Our aim is to estimate the determinants of subcontracting in Turkish textile and engineering industries, and to derive policy implications of our estimates. We estimate subcontract offering and subcontract receiving models for both industries by using panel data on all establishments employing 25 or more workers in the period 1988-97. Our findings show that short-term/unequal relationship exists between parent firms and subcontractors in the textile industry whereas subcontracting relationships in the engineering industry are established between "similar", relatively advanced firms that have complementary assets and technologies.Subcontracting, firm cooperation, vertical integration

Multinational Corporations as a Vehicle for Productivity Spillovers in Turkey

This paper examines the role of multinational corporations (MNCs) as the creator and diffuser of new and superior technologies. If these firms fulfil this attributed role, then they are expected to generate some spillovers to domestic industries in host economies. Theoretical and empirical studies propose that domestic technological capability is also important in this process. Our study addresses the question of productivity spillovers from the activity of MNCs, whether size of the recipient firms and the R&D intensity matter in this respect, and do spillovers change by time. The analysis utilizes a longitudinal data for the Turkish manufacturing industry in 28 3- digit level industries over the 1983-2000 period. Our results suggest that the spillovers from MNCs for the domestic sector of the Turkish manufacturing industry differentiate with respect to size of the recipient domestic firms and by time. Despite that, the evidence tends to speak in favor of negative spillovers in the Turkish manufacturing industry.Productivity spillovers, Multinational Corporations, Turkey.

Trade Openness and the Demand for Skills: Evidence from Turkish Microdata

In this paper we report evidence on the relationship between trade openness, technology adoption and relative demand for skilled labour in the Turkish manufacturing sector, using firm-level data over the period 1980-2001. In a dynamic panel data setting using a unique database of 17,462 firms, we estimate an augmented cost share equation whereby the wage bill share of skilled workers in a given firm is related to international exposure and technology adoption. Overall, results suggest that trade openness and technology play a key role in shifting the demand for labour towards more skilled workers within each firm. Technology-related variables (domestic R&D expenditures and technological transfer from abroad) are positive and significantly related to skill upgrading, as are the involvement of foreign capital in a firm's ownership and the propensity to export. Moreover, firms belonging to those sectors that most raised their imported inputs also experienced a higher increase in the labour cost share of skilled workers. This finding is consistent with the idea that imports by a middle-income country imply a transfer of new technologies that are more skill-intensive than those previously in use in domestic markets. This idea is reinforced by the finding that only imported inputs from industrialised countries − where the potential for innovation diffusion comes from - enter the estimated regression significantly.globalisation, skills, skill-biased technological change, technology transfer, GMM-SYS