Patterns of Productivity Growth and the Wage Cycle in Turkish Manufacturing

In this paper we investigate the distributional consequences of the post-1980 accumulation patterns and technological change in the Turkish manufacturing industries. We utilise two quantitative techniques. First, we make use of the Hodrick-Prescott filter to disintegrate the cyclical variations in productivity growth and wage rates from their respective historical trends, and study the evolution of the wage cycle against the long term productivity patterns in the sector. Next, we decompose the fundamental characteristics of the contributions of productivity growth of the manufacturing sub-sectors to the overall total. Our results suggest very little structural change in the sectoral composition and nature of productivity advances under the post-1980 structural adjustment reforms and outward-orientation, and underscore that the gains in productivity in this period did not materialise as gains in remunerations of wage labour. Contrary to the prognostications of the orthodox theory, the post-1980 export orientation of Turkish manufacturing was not found to lend itself to productivity contributions, and could not be sustained as a viable strategy of 'export-led industrialisation'.     

Political economy of rent-seeking under alternative trade regimes

Zusammenfassung Die politische ?konomie des “Rent-seeking” unter alternativen Au\enwirtschaftssystemen. — Mit Hilfe eines berechenbaren Modells des allgemeinen Gleichgewichts zeichnen die Autoren den Typ einer Volkswirtschaft, in dem pr?ferenzmaximierende (rationale) Produzentenhaushalte einen Teil ihres nominalen Einkommens für „rent-seeking”-Aktivit?ten (Bestechungen) aufwenden, um die Beh?rden bei der Wahl der exportf?rdernden Instrumente zu beeinflussen. Die Autoren benutzen Daten über die türkische Volkswirtschaft, um die Folgen alternativer Ma\nahmen einer au\enwirtschaftlichen Abschottung auf die „rent-seeking”-Aktivit?ten zu analysieren. Dabei stellt sich heraus, da\ die Instrumentenwahl der Beh?rden sowohl von den zugrundeliegenden Au\enwirtschaftssystemen als auch von den privaten “rent-seeking”-Aktivit?ten beeinflu\t wird und da\ das Ph?nomen des „rent-seeking” nicht notwendigerweise ein „geschlossenes” ?konomisches Umfeld verlangt, sondern auch mit den sogenannten „offenen” Strategien des exportinduzierten Wachstums verbunden werden kann.

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Résumé Economie politique de ?rent-seeking? sous des régimes de commerce alternatifs. — A l’aide d’un modèle computable de l’équilibre général, les auteurs décrivent un modèle d’une économie dans laquelle les ménages à entrepreneurs, maximisant leur préférence, donnent une partie de leurs revenus nominaux aux activités de ?rentseeking? (c’est-à-dire à la corruption) pour influencer le gouvernement qui doit choisir les instruments pour inciter l’exportation. En utilisant des données de l’économie turque, les auteurs analysent les conséquences des régimes de commerce alternatifs sur l’activité de?rent seeking?. Les auteurs trouvent que le choix du gouvernement parmi des instruments dépend de tous les deux, des régimes de commerce et des agents privés avec leurs activités de ?rent seeking?; et que le phénomène de?rent seeking? ne demande pas nécessairement un environment économique fermé, mais il peut être aussi associé avec des stratégies soi-disant ouvertes qui incitent un accroissement des exportations.

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Resumen La economia politicadel “rent-seeking” bajo regimenes de comercio alternativos. — Con la ayuda de un modelo de equilibrio general computado (CGE) se representa una economia arquetipo en la cual productores-hogares con maximización de preferencias asignan una proporción de sus ingresos nominales a actividades “rentseeking” (soborno) con el fin de influenciar políticamente la elección de instrumentos para incentivar las exportaciones por parte del gobierno. Utilizando datos sobre la economia turca se analizan las consecuencias de grados alternativos de apertura de la economia sobre la actividad de “rent-seeking”. Se encuentra que la elección de instrumentos del gobierno es sensible tanto al régimen comercial existente como a las actividades de “rent-seeking” por parte de los agentes privados, y que el fenómeno de “rentseeking” no necesariamente implica presiones en favor de una economia cerrada, sino que también se lo puede asociar con estrategias de crecimiento por exportaciones en el marco de un economía abierta.

     

Strategic policies and growth: an applied model of R&D-driven endogenous growth

We introduce and explore a general equilibrium model with R&D-driven endogenous growth, whose antecedents are the models of Romer (1990) [Romer, P.M., 1990. Endogenous technological change. Journal of Political Economy, 98, S71-102] and Grossman and Helpman (1991) [Grossman, G.M., Helpman E., 1991. Innovation and Growth in the Global Economy, The MIT Press, Cambridge]. Utilizing evidence from recent econometric studies on sources of growth, the model also accounts explicitly for cross-border technological spillovers. The model is specified and calibrated to data from Japan, and is solved to obtain both the transitional and the steady-state equilibria. We explore the effects of selective trade and R&D promotion policies on long-run growth and social welfare. The model results suggest that while a strategic trade policy has little effect on re-allocating resources into domestic R&D activities, it can significantly affect the cross-border spillovers of technological knowledge, which, in turn, stimulates growth. We find that trade liberalization may cause the growth rate to fall and lead to a loss of social welfare in the long-run, although it improves welfare in the short-run. R&D promotion policies stimulate growth by inducing private agents to allocate more resources to domestic R&D, as well as to take greater advantage of global R&D spillovers. Here, we find significantly high growth effects together with sizable gains in social welfare at low incidence to tax payers.     

On the Differential Impact of the Asian Crisis on the World Economy: A General Equilibrium Perspective

Abstract Three years and more have passed since the outbreak of the Asian Financial crisis in 1997. We observe that the world economy was far from a ‘global slump,‘ yet the burden of adjustment had been uneven across countries. The crisis had a negative effect on the other developing countries, while the impact on industrial economies had been small, and even positive at the onset of the crisis. In this paper, we attempt to shed light on this differential impact of the crisis, and illustrate the uneven mechanics of adjustment in a world with commodity trade and capital flows. The analysis is conducted in an intertemporal general equilibrium model with multi‐region and multi‐commodity specification.     

On Structural Sources of the 1994 Turkish Crisis: a CGE modelling analysis

This paper investigates the impact of the Turkish public sector imbalances on the evolution of the economic crisis during 1990–93. A computable general equilibrium model is used. The theoretical basis of the model rests upon the structuralist/Keynesian macro foundations. Its distinguishing features entail accommodation of oligopolistic mark-up pricing rules in the industrial sectors, and endogenous solution of capacity utilisation and unemployment levels through Keynesian mechanisms of effective final demand. The results of the model underscore the importance of intra-class relations of income distribution and conflict in the evolution of price movements in the Turkish economy. It is further argued that the sources of the capitalist in the administrative interventions of the state towards protection of the capitalist and rural incomes, which would otherwise be squeezed out in favour of wage-labour in the early 1990s.     

Measuring exchange rate misalignment in Turkey

Turkey has embarked an extensive dis-inflation and stabilization program in December 1999. The programme exclusively relied on a nominally pegged (anchored) exchange rate system for dis-inflation and on fiscal austerity. In February 2001, however, Turkey experienced a severe financial crisis which necessiated the dismantling of the exchange rate anchor and a switch to a regime of free float.

This article proposes a new methodology to measure exchange rate misalignment for Turkey over the period January 1992 to December 2001. In a single equation framework, the model estimates the real exchange rate within a time varying parameter model, where a return-to-normality assumption about the parameters is assumed. Contrary to common belief, it is found that, except the initial four months of the stabilization programme, the Turkish lira remained undervalued for most of 2000. Also, one observes a pattern where the lira has been overvalued after the financial crisis of 1994 until 1998, and has displayed a tendency of undervaluation after then.     

Turkey’s employment subsidy program under the great recession: a general equilibrium assessment

The objective of this paper is to provide an impact analysis of the macroeconomic consequences of the employment subsidization programs in Turkey implemented under the post-2008 crisis period. To this end, an applied general equilibrium model (of the computable general equilibrium – CGE variety) is utilized to investigate the production, incomes generation, and aggregate demand components of the domestic economy. The analysis highlights the rather limited returns to the subsidization package, and argues that much of this was due to the dis-equilibriating and fragile macroeconomic environment under the neoliberal policy framework. The massive drop of domestic savings; a severe mis-alignment in the real exchange rate causing significant appreciation of the domestic currency; rise of the external deficit and of foreign indebtedness along with a severe fall in the total productivity effort were different facets of this poor macroeconomic performance. Thus, an important message of the study is that, had the macroeconomic balances were maintained at their historical averages, and a more competitive exchange rate could have been pursued, as much as threefolds of a gain in aggregate employment could have been generated with the same intensity of the employment subsidization package, in comparison to the historically realized levels.     

Real wages,profit margins and inflation in Turkish manufacturing under post-liberalization

This article reports investigations into the behaviour of gross profit margins (mark-ups) in Turkish manufacturing industries for the post-1980 liberalization period in relation to price inflation, trade liberalization (openness) and real wage costs. Panel data econometrics over 29 subsectors of Turkish manufacturing are used over the period 1980–1996. Results suggest that profit margins are positively and significantly related both to price inflation and real wage costs. However, openness is found to have very little impact on profit margins.