Facts on Business Dynamism in Turkey

Ufuk Akcigit, Yusuf Emre Akgunduz, Seyit Cilasun (), Elif Ozcan Tok and Fatih Yilmaz

Working Papers from Research and Monetary Policy Department, Central Bank of the Republic of Turkey

Abstract: In this paper, we investigate various trends on competition and business dynamism in the Turkish manufacturing sector. More speci?cally, using micro level administrative data sets of ?rm balance sheets, credit registry and social security records, we focus on moments such as ?rm entry, exit, pro?tability, worker reallocation, labor share, labor productivity and credit distributions, among several others. Our results indicate that business dynamism in the Turkish manufacturing sector was relatively stable and even improving until 2012 but has been declining since then. We ?nd that market concentration and exit rates have started to rise, yet new business creation, labor share of output and economic activities of young ?rms have declined. Using a model with endogenous market competition, we show that an adverse shock to cost of R&D investment can explain these empirical trends. We identify increases in ?nancing costs after 2012 of followers as a potential mechanism for our ?ndings in Turkey. We next perform a policy analysis with our model which suggests that providing support (e.g., R&D subsidy) to immediate followers can undo the adverse effects of the negative shock to ?nancing costs and therefore foster competition and faster growth.

Keywords: Business dynamism; Market concentration; Competition; Turkish economy (search for similar items in EconPapers)
JEL-codes: E22 E25 L12 O31 O33 O34 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-ara, nep-com and nep-mac
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Citations: View citations in EconPapers (4)

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https://www.tcmb.gov.tr/wps/wcm/connect/EN/TCMB+EN ... g+Paperss/2019/19-30 (application/pdf)

Related works:
Journal Article: Facts on business dynamism in Turkey (2020)
Working Paper: Facts on Business Dynamism in Turkey (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:tcb:wpaper:1930

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