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

Erol Taymaz () and Yilmaz Kilicaslan ()

No 108, ERC Working Papers from ERC - Economic Research Center, Middle East Technical University

Abstract: 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.

Keywords: Subcontracting; firm cooperation; vertical integration (search for similar items in EconPapers)
JEL-codes: L14 L22 L61 L67 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2001-08, Revised 2001-08
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