Imported input dependence in manufacturing industry: The case of Türkiye

The aim of this study is to identify the determinants of imported input dependency at the firm level by examining the intensity of imported input use among firms in Türkiye's manufacturing sector during the period 2003–2015 and its evolution over time. The originality of the study lies in its use of firm-level data from Foreign Trade Statistics and the Annual Industry and Service Statistics to analyze import dependency at the firm level. In this respect, the study is unique among existing literature. The findings of the analyses indicate that a 1 percent increase in exports leads to a 0.17 percent rise in imported input dependency, whereas a 1 percent increase in the number of employees reduces imported input dependency by 1.34 percent. Similarly, a 1 percent increase in raw material/input usage increases imported input dependency by 1.34 percent. Moreover, a 1 percent improvement in total factor productivity results in a 2.41 percent decrease in imported input dependency, which is statistically significant. Finally, regarding the dummy variables, when they take the value of 1, it is found that firms with low technology intensity have a 7.73 percent higher level of imported input dependency, firms with medium-low technology intensity have a 9.26 percent higher dependency, and firms with medium-high technology intensity have a 6.98 percent higher dependency, all of which are statistically significant. On the other hand, the dummy variable indicating firms in which foreign investors hold 10 percent or more of the voting rights in management is found to be statistically insignificant.