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Entry to Foreign Markets and Productivity: Evidence from a Matched Sample of Turkish Manufacturing Firms

Author

Listed:
  • Basak Dalgic

    (Department of Public Finance, Hacettepe University)

  • Burcu Fazlioglu

    (Department of International Entrepreneurship, TOBB ETU University)

  • Deniz Karaoglan

    (Department of Economics, METU)

Abstract

We examine the effects of international trading activities of firms on creating productivity gains in Turkey by using a recent firm level dataset over the period 2003-2010. We establish treatment models and investigate the productivity improvements of firms through trade by using Propensity Score Matching (PSM) techniques along with Difference-in-Difference (DID) estimates. Three different groups of treatment are constructed: (i) firms that involve only in importing activities, (ii) firms that involve only in exporting activities, (iii) firms that involve in both exporting and importing activities. The results of the study suggest that both exporting and importing have positive significant effects on total factor productivity (TFP) and labor productivity (LP) of firms. Importing is found to have a greater impact on productivity of firms compared to exporting. Further, two-way trade is found to have more significant effects than those of one-way trade on firm productivity Finally, our results indicate that international trade has greater impact on LP rather than TFP of firms.

Suggested Citation

  • Basak Dalgic & Burcu Fazlioglu & Deniz Karaoglan, 2014. "Entry to Foreign Markets and Productivity: Evidence from a Matched Sample of Turkish Manufacturing Firms," ERC Working Papers 1403, ERC - Economic Research Center, Middle East Technical University, revised May 2014.
  • Handle: RePEc:met:wpaper:1403
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    More about this item

    Keywords

    Productivity; Imports; Exports; Propensity Score Matching.;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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