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

Global Links and Local Bonds: The Role of Ownership and Size in Productivity Growth

This paper examines direct and indirect contributions of foreign firms and small and medium-sized enterprises (SMEs) to aggregate productivity growth. We focus our attention on foreign firms and small firms for three reasons. First, industrial policy in almost all countries is oriented towards supporting SMEs and attracting foreign investment. Second, these two categories of firms contribute to micro-heterogeneity in all industries. Third, the recent industrial dynamics literature on foreign investment and small firms emphasizes the potential benefits of foreign firms and SMEs in generating new technologies, and creating new jobs. Using the data for Turkish manufacturing plants, we estimate production functions for all ISIC 4-digit level industries for the 1983-2001 period. We decompose productivity growth into its components (structural change, entry and exit, technical change, efficiency change, and scale effects) by firm ownership and size. The decomposition analysis by firm ownership and size allows us to understand the sources of productivity contributions by foreign firms and small firms.Productivity dynamics, decomposition, foreign direct investment, small and medium sized enterprises

Vision 2023: Turkey’s National Technology Foresight Program – a contextualist description and analysis

This paper describes and analyses Vision 2023 Turkish National Technology Foresight Program. The paper is not about a mere description of the activities undertaken. It analyses the Program from a contextualist perspective, where the Program is considered in its own national and organizational contexts by discussing how the factors in these contexts led to the particular decisions taken and approaches adopted when the exercise was organized, designed and practiced. With the description and analysis of the Vision 2023 Technology Foresight Program, the paper suggests that each Foresight exercise should be considered in its own context. The exercise should be organized, designed and practiced by considering the effects of the external contexts (national, regional and/or corporate) and organizational factors stemming from these different context levels along with the nature of the issue being worked on, which constitute the content of the exercise.Foresight, contextualism, Vision 2023, Turkey, Science and Technology Policy

Who benefits from training and R&D: The firm or the workers? A study on panels of French and Swedish firms

The present paper offers a novel study of the effects of intangible assets on wages and productivity. Training, R&D, and physical capital are all taken into account, and their joint effects examined. We use panels of firms in order to control for unobserved fixed effects and the potential endogeneity of training and R&D, and have been able to obtain data for two different countries, France and Sweden, in order to explore the effects of institutional or national specificity. The estimation of productivity and wage equations allows us to show how the benefits of investment in physical capital, R&D and training are shared between the firm and the workers. Although the workers obtain significant benefits, the study shows that the firm obtains the largest return on the investments it makes. This is true not only for physical capital and R&D, but also for training. It suggests that firms can rationally invest in training and that the issue of under-investment in training should be re-examined.Training, R&D, productivity, wages

History Matters for the Export Decision Plant Level Evidence from Turkish Manufacturing Industry

In a dynamic panel data framework, we investigate the factors influencing the export decision of the Turkish manufacturing plants over the 1990-2001 period. Our results support the presence of high sunk costs of entry to export markets, as well as the hypothesis that the full history of export participation matters for the current export decision. We further show that the effect of the past export experience on current export decision rapidly depreciates over time: Recent export market participation matters more than the participation further in the past. Finally, we show that while persistence in exporting helps lower the costs of re-entry today, there are diminishing returns to export experience. Our results are robust to plant characteristics (plant size, technology, composition of the employment), the spillovers from the presence of exporters in the same industry, as well as industry and year effects.Export decision, productivity, sunk costs, plant characteristics