New Lessons from an Old Strategy: Import Substitution, Productivity and Competitiveness

Yilmaz Kilicaslan and Ilhom Temurov
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Ilhom Temurov: Anadolu University, Department of Economics

No 15002, EconWorld Working Papers from WERI-World Economic Research Institute

Abstract: This paper examines the relation between import substitution, labour productivity and industrial competitiveness. More specifically this paper tests if the import substitution enhances both labour productivity and competitiveness in Korean and Turkish manufacturing industries. The data used in the analysis are obtained from UNIDO Industrial Demand Supply (2013) and UNIDO Industrial Statistics (2013) databases and cover the period of 1981-2001. Our results show that Turkish economy has really left import substitution after 1980. However, we found significant share of import substitution in total production in professional and scientific equipment, transportation equipment, electrical machinery, miscellaneous petroleum products, industrial chemicals industries and petroleum refineries in Korea especially in the 1990s. The results based on unbalanced dynamic panel data estimations showed that import substitution did not enhance labour productivity in manufacturing industry of both Korea and Turkey. However, we found that import substitution affects industrial competitiveness positively in both Korea and Turkey. Apart from the positive impact of import substitution on competitive-ness, we also found in this study that while Korean manufacturing industry competitiveness is closely associated with labour productivity, competitiveness of Turkish manufacturing industry depends on the factors such as exchange rates, wage differentials rather than labour productivity.

Keywords: productivity; competitiveness; import substitution; manufacturing; Turkey; Korea (search for similar items in EconPapers)
JEL-codes: L60 O12 O25 O47 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2015-12, Revised 2015-12
New Economics Papers: this item is included in nep-ara and nep-cwa
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Persistent link: https://EconPapers.repec.org/RePEc:ana:wpaper:15002

DOI: 10.22440/EconWorld.WP.2015.002

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