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On tariff changes and firm-production evolution: insights from Turkish manufacturing

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  • Alessia Lo Turco
  • Daniela Maggioni

Abstract

We contribute to the yet limited evidence on the relationship between trade liberalisation and a firm's product mix and diversification strategies for an emerging economy, Turkey. Lower import barriers foster firms’ specialisation in their core products. A drop in import tariffs, indeed, enhances a firm's propensity to drop fringe varieties and favours production growth of core products. More importantly, it favours firms’ specialisation in more sophisticated goods. Export tariff cuts, instead, by relaxing competitive pressure at home and lowering the cost to export, only reduce the firms’ incentive to innovate.

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  • Alessia Lo Turco & Daniela Maggioni, 2016. "On tariff changes and firm-production evolution: insights from Turkish manufacturing," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 25(2), pages 131-164, March.
    • Handle: RePEc:taf:jitecd:v:25:y:2016:i:2:p:131-164
    DOI: 10.1080/09638199.2015.1038846
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