The Micro Evolution of Trade and Turnover in Turkey Under the Global Crisis

Abstract

We provide evidence on the effects of the 2009 crisis on Turkish manufacturing. The exploration of firm and firm-product extensive and intensive margins confirms the prevalence of the latter in the fall of export sales and discloses the former's relevance in the dramatic import contraction. The analysis of firm and product heterogeneity reveals that productivity drove the negative evolution of the export intensive margin to such an extent that it significantly affected trade extensive margins and postponable goods were the most affected products. In addition, the foreign demand shock suffered by exporters propagated to their import demand. Interestingly, we show that the crisis hit produced exports less than the carry-along ones and that the domestic market cushioned the downturn effects especially for larger firms. This hints at the importance of domestic counter-cyclical policies.

Keywords: Crisis, Exports, Imports, Turnover, Turkey

JEL Classification: D22, F10, F14