On tariff changes and firm-production evolution: insights from Turkish manufacturing

Alessia Lo Turco and Daniela Maggioni

The Journal of International Trade & Economic Development, 2016, vol. 25, issue 2, 131-164

Abstract: We contribute to the yet limited evidence on the relationship between trade liberalisation and a firm's product mix and diversification strategies for an emerging economy, Turkey. Lower import barriers foster firms’ specialisation in their core products. A drop in import tariffs, indeed, enhances a firm's propensity to drop fringe varieties and favours production growth of core products. More importantly, it favours firms’ specialisation in more sophisticated goods. Export tariff cuts, instead, by relaxing competitive pressure at home and lowering the cost to export, only reduce the firms’ incentive to innovate.

Date: 2016
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DOI: 10.1080/09638199.2015.1038846

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