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Global Links and Local Bonds: The Role of Ownership and Size in Productivity Growth

Author

Listed:
  • Erol Taymaz

    (Middle East Technical University)

  • Ebru Voyvoda

    (Middle East Technical University)

  • Kamil Yilmaz

    (Koc University)

Abstract

This paper examines direct and indirect contributions of foreign firms and small and medium-sized enterprises (SMEs) to aggregate productivity growth. We focus our attention on foreign firms and small firms for three reasons. First, industrial policy in almost all countries is oriented towards supporting SMEs and attracting foreign investment. Second, these two categories of firms contribute to micro-heterogeneity in all industries. Third, the recent industrial dynamics literature on foreign investment and small firms emphasizes the potential benefits of foreign firms and SMEs in generating new technologies, and creating new jobs. Using the data for Turkish manufacturing plants, we estimate production functions for all ISIC 4-digit level industries for the 1983-2001 period. We decompose productivity growth into its components (structural change, entry and exit, technical change, efficiency change, and scale effects) by firm ownership and size. The decomposition analysis by firm ownership and size allows us to understand the sources of productivity contributions by foreign firms and small firms.

Suggested Citation

  • Erol Taymaz & Ebru Voyvoda & Kamil Yilmaz, 2010. "Global Links and Local Bonds: The Role of Ownership and Size in Productivity Growth," Koç University-TUSIAD Economic Research Forum Working Papers 1020, Koc University-TUSIAD Economic Research Forum.
    • Handle: RePEc:koc:wpaper:1020
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    File URL: http://eaf.ku.edu.tr/sites/eaf.ku.edu.tr/files/erf_wp_1020.pdf
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    References listed on IDEAS

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    Cited by:

    1. FERRAGINA, Anna Maria, 2013. "The Impact of FDI on Firm Survival and Employment: A Comparative Analysis for Turkey and Italy," CELPE Discussion Papers 127, CELPE - CEnter for Labor and Political Economics, University of Salerno, Italy.
    2. Kamil Yilmaz, 2010. "Taking Stock: The Customs Union between Turkey and the EU Fifteen Years Later," Koç University-TUSIAD Economic Research Forum Working Papers 1023, Koc University-TUSIAD Economic Research Forum.

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    More about this item

    Keywords

    Productivity dynamics; decomposition; foreign direct investment; small and medium sized enterprises;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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