The Export Performance of Turkey (1996-2013)

Abstract

The high import content of Turkish exports and the dominance of low- and medium-tech in Turkey’s export basket pose a challenge to sustainable current account deficit and economic growth. In this study, we investigate the export performance of Turkey to understand the underlying causes of high current account deficit. First, we show that Turkey performs poorly compared to its competitors in terms of innovation and skills, business environment and access to finance, which are the main factors that stimulate exports. Next, we test whether improvements in these areas would contribute to the export performance of Turkish firms. We use a data set from the Productivity and the Investment Climate Survey (2005) and the Business Environment and Enterprise Performance Survey (2008, 2013), carried out by the European Bank for Reconstruction and Development and the World Bank. The results suggest that more-productive and larger firms are more likely to export. Also, innovation, inward foreign direct investment, foreign input use and better marketing boost the export probability. After a successful entry, export sales increase by productivity, size and foreign ownership. We also show that the export performance is associated with different factors for firms different in size and small- and medium-sized firms rely on trade intermediaries to export their products.