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Macroeconomic adjustment and private manufacturing investment in Turkey: a time-series analysis

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  • Oner Guncavdi-super-˙
  • Andrew McKay

Abstract

Despite the drastic switch to market-based policies and outward orientation in Turkey during the 1980s, private investment in manufacturing industry has still not revived after seventeen years of structural adjustment. This paper examines the main determinants of private investment in the manufacturing sector and the impacts of structural adjustment (particularly financial liberalisation as an integral part of the reform) on it. The results show that liberalisation policies in financial markets appear to have positive effects by reducing the stringency of quantity constraints on investment while the high interest rates resulting from financial liberalisation had no significant impact on investment. Macroeconomic instability, proxied by the variability of the inflation rate, seems to have discouraged investment in manufacturing.

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File URL: http://www.tandfonline.com/doi/abs/10.1080/00036840310001628099
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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Applied Economics.

Volume (Year): 35 (2003)
Issue (Month): 18 ()
Pages: 1901-1909

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Handle: RePEc:taf:applec:v:35:y:2003:i:18:p:1901-1909

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  1. Nickell, Stephen, 1985. "Error Correction, Partial Adjustment and All That: An Expository Note," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 47(2), pages 119-29, May.
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  8. Chhibber, Ajay & van Wijnbergen, Sweder, 1988. "Public policy and private investment in Turkey," Policy Research Working Paper Series 120, The World Bank.
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Cited by:
  1. Günçavdi, Öner & Küçük, Ali Erhan, 2013. "Investment expenditure and capital accumulation in an inflationary environment: The case of Turkey," Journal of Policy Modeling, Elsevier, vol. 35(4), pages 554-571.

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