MARMARA econ

PhD Theses:

Gülşah ÖZŞAHİN

Trade, Foreign Direct Investments, Research and Development, Human Capital and Technology Diffusion in Turkish Manufacturing Sector

2017

(Supervisor:A. Suut Doğruel)

ABSTRACT

In this thesis, the effects of international trade (exports and imports), foreign direct investments, technological developments (technology diffusion and R&D studies) and human capital on change in productivity are examined in the manufacturing sub-sectors in Turkey. The manufacturing sub-sectors are determined according to the NACE Rev. 2 two-digit classification system.

According to the estimation results, technology gap has a positive lagging effect on technology development. In addition, the effect seen in the next year, suggests a rapid adaptation to the technology, and it may be a sign that there may be a convergence to the technology frontier in the future. Besides, productivity level and change in productivity are higher in import-competing sectors. While, the net exporter sectors consist from medium-low and low technology sectors. The relationship between import penetration and change in labor productivity is positive and significant, while, the relationship between export intensity and change in labor productivity is negative and significant. Turkey can increase the access to various products at all quality levels, and this can improve productivity. The adverse effect of exports on productivity change may be because the exports are mostly to European Union and high technology countries. Despite, continuing in international markets adversely affects the productivity change; Turkey should continue to produce in the international market in order to benefit from gains through trade.

The most important factor affecting productivity change is tangible investments. As the tangible investments increase, the share of investments allocated to R&D studies increases. Moreover, market concentration affects productivity change positively. Low technology industries are more competitive, and export to high technology countries, and tangible investments are low.

In the sectors with high technology level, that require R&D studies and have higher intangible investments and higher expenditures on software, patents and rights, the human capital utilization is higher and the relation between human capital and labor productivity is positive. However, in these sectors, tangible investments are lower. Thus, as a policy suggestion, Turkey should increase investments in these sectors, in order to catch-up frontier technology in the future.