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Size and Foreign Ownership Effects on Productivity and Efficiency: An Analysis of Turkish Motor Vehicle and Parts Plants

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  • Mahmut Yaşar
  • Catherine J. Morrison Paul

Abstract

The levels and interactions of foreign connections and size may be important determinants of plant productivity and efficiency, particularly in a developing country such as Turkey. We explore the productive contributions of foreign ownership (FDI), emphasizing its linkages with plant size and input composition, for plants in the Turkish motor vehicle and parts industry. We evaluate the implications of FDI for overall productivity, input‐specific contributions, and returns to scale, using OLS, stochastic production frontier, and quantile (size‐specific) regression estimates of a translog production function model. We find significantly higher productivity of plants with foreign ownership, driven by a higher marginal product of labor, particularly for smaller plants. This effect augments the productive contributions of technical progress, capital intensity, and increasing returns to scale. FDI is also associated with a greater productive contribution of imported capital investment.

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  • Mahmut Yaşar & Catherine J. Morrison Paul, 2009. "Size and Foreign Ownership Effects on Productivity and Efficiency: An Analysis of Turkish Motor Vehicle and Parts Plants," Review of Development Economics, Wiley Blackwell, vol. 13(4), pages 576-591, November.
    • Handle: RePEc:bla:rdevec:v:13:y:2009:i:4:p:576-591
    DOI: 10.1111/j.1467-9361.2009.00527.x
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    3. Caglayan, Mustafa & Demir, Firat, 2014. "Firm Productivity, Exchange Rate Movements, Sources of Finance, and Export Orientation," World Development, Elsevier, vol. 54(C), pages 204-219.
    4. Adugna Lemi & Ian Wright, 2020. "Exports, foreign ownership, and firm-level efficiency in Ethiopia and Kenya: an application of the stochastic frontier model," Empirical Economics, Springer, vol. 58(2), pages 669-698, February.
    5. Demir, Firat, 2013. "Growth under exchange rate volatility: Does access to foreign or domestic equity markets matter?," Journal of Development Economics, Elsevier, vol. 100(1), pages 74-88.
    6. Mustafa Caglayan & Firat Demir, 2011. "Firm productivity, exchange rate movements, sources of finance and export orientationInventories and sales uncertainty," Working Papers 2011004, The University of Sheffield, Department of Economics, revised Feb 2011.
    7. Kandilov, Ivan T. & Richards, Hannah & Zhou, Xi & Yasar, Mahmut & Rejesus, Roderick M., 2022. "The Impact of Foreign Acquisitions on Employment, Output, and Wages in the U.S. Agrifood Industry," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322302, Agricultural and Applied Economics Association.
    8. Anubha Dhasmana, 2015. "Transmission of real exchange rate changes to the manufacturing sector: The role of financial access," International Economics, CEPII research center, issue 143, pages 48-69.
    9. Arpita Ghose & Chandrima Chakraborti, 2013. "The Relative Role of Imports and Exports in Explaining Productivity of Indian Bio-Pharmaceutical Firms: Evidence from Non Parametric Data Envelopment Analysis," Foreign Trade Review, , vol. 48(2), pages 165-201, May.
    10. Nizam, Ahmed Mehedi, 2023. "FDI, exchange rate and firm's gain in terms of real assets," MPRA Paper 119597, University Library of Munich, Germany.

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