Size and Foreign Ownership Effects on Productivity and Efficiency: An Analysis of Turkish Motor Vehicle and Parts Plants

Review of Development Economics, Vol. 13, No. 4, pp. 576-591, November 2009

Posted: 4 Mar 2011

See all articles by Mahmut Yasar

Mahmut Yasar

University of Texas at Arlington - Department of Economics; Emory University - Department of Economics

Catherine J. Morrison Paul

University of California, Davis - Department of Agricultural and Resource Economics; National Bureau of Economic Research (NBER); University of Hartford - Barney School of Business

Date Written: November 2009

Abstract

The levels and interactions of foreign connections and size may be important determinants of plant productivity and efficiency, particularly in a developing country such as Turkey. We explore the productive contributions of foreign ownership (FDI), emphasizing its linkages with plant size and input composition, for plants in the Turkish motor vehicle and parts industry. We evaluate the implications of FDI for overall productivity, input-specific contributions, and returns to scale, using OLS, stochastic production frontier, and quantile (size-specific) regression estimates of a translog production function model. We find significantly higher productivity of plants with foreign ownership, driven by a higher marginal product of labor, particularly for smaller plants. This effect augments the productive contributions of technical progress, capital intensity, and increasing returns to scale. FDI is also associated with a greater productive contribution of imported capital investment.

JEL Classification: D21, D24, L60

Suggested Citation

Yasar, Mahmut and Morrison Paul, Catherine J., Size and Foreign Ownership Effects on Productivity and Efficiency: An Analysis of Turkish Motor Vehicle and Parts Plants (November 2009). Review of Development Economics, Vol. 13, No. 4, pp. 576-591, November 2009 , Available at SSRN: https://ssrn.com/abstract=1775004

Mahmut Yasar (Contact Author)

University of Texas at Arlington - Department of Economics ( email )

701 S. West Street
Arlington, TX 76019
United States

Emory University - Department of Economics ( email )

Catherine J. Morrison Paul

University of California, Davis - Department of Agricultural and Resource Economics ( email )

One Shields Avenue
Davis, CA 95616
United States
916-752-0469 (Phone)
916-752-5614 (Fax)

National Bureau of Economic Research (NBER)

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University of Hartford - Barney School of Business

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United States

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