Productivity response to reduction in trade barriers: Evidence from Turkish manufacturing plants

Kamil Yilmaz () and Şule Özler
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Şule Özler: UCLA

Koç University-TUSIAD Economic Research Forum Working Papers from Koc University-TUSIAD Economic Research Forum

Abstract: We examine the effects of trade policy changes on the evolution of plant productivity. Plant level productivities are estimated for the 1983-96 period following the procedure of Olley and Pakes (1996). Industry averages indicate that productivity gains are largest in import competing industries with highest gains reaching to 8% per year during periods of rapid decline in protection rates. A decomposition of industry level productivity gains also suggests important differences across sectors by trade orientation. Though reallocation of market shares to more productive plants are important in both export oriented, and import competing sectors, within plant productivity improvements are significant only in export-oriented sectors. We also investigate the effects of changes in protection rates on plant level productivities using regressions that control for endogeneity of protection rates (tariff and non-tariff). We find that productivity improvements resulting from declining protection levels are statistically significant and economically important, especially in import competing sectors. This analysis also suggests that there is a huge degree of heterogeneity, measured by plant size, in response to changes in protection rates.

Keywords: Production function; semi-parametric estimation; protection; import penetration; domestic competition. (search for similar items in EconPapers)
JEL-codes: C14 D24 F13 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2007-01
New Economics Papers: this item is included in nep-cwa, nep-eff and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Related works:
Journal Article: Productivity response to reduction in trade barriers: evidence from Turkish manufacturing plants (2009)
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