Competitiveness and Total Factor Productivity in Turkish Agriculture

Abstract

Agricultural production can be observed to reach 3-4 percent annual growth rates with the exception of drought like shocks in Turkey. In recent years, significant level of investments, qualified input use and more irrigated land led to productivity improvements. However, there are not enough studies on the change in total factor productivity (TFP) or on regional dynamics of the change in TFP in the agricultural sector. Using Turkish statistical classification of territorial units (NUTS-2 classification of the EU), detailed data on economic and social indicators were collected so as to examine the change in regional TFP figures to point out the results and policy priorities. In this context, agricultural output change is determined not only by the labor, capital and other agricultural production inputs but also by the factors that are effective on the change in total factor productivity, that are dealt with in this study. At this point, macroeconomic and institutional factors play an important role in the change in total factor productivity; inflation, exchange rate, economic volatility, share of high-tech exports, rural development supports, human capital. Since data were not available for the structure of the soil at regional level it could not be considered as a factor in estimations. As a result in this study, especially technological progress, human capital and rural development support have significant impacts on the change in total factor productivity whereas changes in the exchange rate have negative effects. An important result here is that the impact of agricultural supports other than rural development supports could not be determined statistically as a cause changing factor productivity.