The Productivity and Profitability Gains of the Top Turkish Industrial Enterprises from the Global Value Chains Participation

Abstract

We first calculate the global value chains (GVCs) participation indices from the Full Eora data of the Eora Global Supply Chain Database by employing advanced calculations methodologies. Then, we examine the productivity and profitability effects of various GVC participation measures by using the dataset on top 1000 Turkish industrial enterprises. We use OLS and fixed effects estimates in our analysis. We actually utilize the weighted OLS and fixed effects estimations to cope with the variation in the firm size. Our estimations indicate that while backward GVC participation lowers both labor productivity and profitability growth, forward GVC participation promotes both. Moreover, simple and complex backward participation have similarly negative effects on productivity and profitability growth, simple and complex forward participation have the completely opposite effects though. We then provide substantial evidence for the differing effects of participation on productivity and profitability growth between pre-crisis and post-crisis periods.