A Firm-Level Analysis of Export Performance in Turkish Automotive Manufacturing Industry

Karagöz Özenç F., Akıncı A.

European Trade Study Group Conference, Athens, Greece, 12 - 14 September 2024, pp.1-20, (Summary Text)

  • Publication Type: Conference Paper / Summary Text
  • City: Athens
  • Country: Greece
  • Page Numbers: pp.1-20
  • Istanbul University Affiliated: Yes

Abstract

This study aims to investigate the factors influencing the export performance of key industry firms and supplier firms within the Turkish automotive manufacturing sector in a comparative fashion. Using firm-level micro data sets from the Turkish Statistical Institute's (TURKSTAT) manufacturing census spanning from 2009 to 2020, this paper aims to investigate how firm-level characteristics; technological capacity, labor costs, government R&D incentive share, total labor productivity together with the real effective exchange rate contribute to differences in firm export growth in the Turkish automotive manufacturing industry.

Traditionally, when assessing export performance, researchers often consider broad macroeconomic variables like country size, distance, real exchange rate, tariffs, and wage levels. Nevertheless, there is an increasing necessity to pinpoint the specific factors at the firm level, especially within certain manufacturing sectors and their small and medium-sized enterprises (SMEs), which notably influence the export performance of a country as a whole. In recent years, numerous studies have contributed to understanding firm-level export performance and the key influencing factors for a variety of countries and industries.  Within this range of industries, the automotive industry is frequently seen as the fundamental pillar of an economy by triggering knowledge spillovers, capital accumulation and industrial growth in numerous developing countries. Hence, our analytical framework aligns with the latest developments in the new trade theory and international business literature, which emphasizes the role of firm heterogeneity and the significance of firm productivity in accessing export markets.

The results of the unbalanced panel data analysis yielded numerous findings. First of all, unlike the key industry, R&D expenditures have a positive effect on export performance in only supplier industry; total labor productivity, value-added share, total labor compensation, real effective exchange rate, trade openness, and trade balance have a positive effect on export performance in key and supplier industries, although their impacts are higher in key industry; the share of public subsidies in internal R&D expenditures has positive effect on export performance in key industry and negative effect on it in supplier industry; import penetration has positive effect on export performance in supplier industry, and it is statistically insignificant in key industry; per capita labor cost is insignificant in both of the industries.