exportboom - MP A R Munich Personal RePEc Archive...

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Munich Personal RePEc Archive Investigation on the Determinants of Turkish Export-Boom in 2000s Aysan, Ahmet Faruk and Hacihasanoglu, Yavuz Selim UNSPECIFIED 2007 Online at http://mpra.ub.uni-muenchen.de/5493/ MPRA Paper No. 5493, posted 07. November 2007 / 04:45
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1 INVESTIGATION ON THE DETERMINANTS OF TURKISH EXPORT-BOOM IN 2000s Ahmet Faruk Aysan * Yavuz Selim Hac ı hasano ğ lu ** Abstract This paper investigates the causes of Turkish export-boom after 2000 in the manufacturing sector. We mainly concentrate on cost and productivity aspects of the production in the manufacturing sector. Effects of productivity, wage and exchange rate are analyzed in the framework of the augmented unit labor cost model. Following the Edwards and Golub (2004) paper we use the dynamic panel data techniques for the analysis. In addition, the importance of the above mentioned factors is examined for the rising and declining sectors. We find that manufacturing export is negatively related to the unit labor cost (ULC). Decomposition of ULC into its two components also shows that an improvement in productivity increases export while an increase in nominal wages decreases it. We also find that nominal wage is an important factor in the declining sectors while productivity is the stimulus in rising sectors. JEL Classification : F14, F15, F16 Keywords : Manufacturing export, unit labor cost, wage, productivity, real effective exchange rate * Ahmet Faruk Aysan, Department of Economics, Bogaziçi University, Istanbul 34342 Turkey [email protected] ** Yavuz Selim Hac ı hasano ğ lu, Department of Economics, Bogaziçi University, [email protected]
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2 1. Introduction Turkey’s export increased substantially in the years between 1996 and 2006. In 1996, total export was 23 billion dollars, whereas in 2006 it reached 85 billion dollars. Before concentrating on the export performance of Turkey in last 11 years it is necessary to figure out the process towards integration of Turkish economy to the world economy. Turkey’s import substitution industrialization strategy in 1960s and 1970s shifted towards an export- oriented industrialization strategy in the 1980s. The main objectives of the new strategy were promotion of export, liberalization of foreign trade regime, and encouragement of the private sector activities. Since that date, the main stimulus behind all governments’ economic policy has been the integration of Turkish economy to world markets and promotion of export. In this regard, the beginning of 1980s constituted a turning point in the economic history of Turkey. Reforms after trade liberalization in the early 1980s spurred private sector activity and improved the structural factors for international competitiveness which caused export high growth rates. The period between 1981-87 export revenues increased 15% on average.
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