The impact of ownership structure on energy intensity in the Turkish manufacturing industry

Energy is one of the fundamental factors of the economy, as it is in all aspects of life. Every good and service produced is ultimately based on energy. Therefore, energy use and intensity are important not only in terms of macroeconomic indicators but also with respect to the production structure of firms at the micro level. The aim of this study is to analyze the impact of firm ownership structure on energy intensity in the Turkish manufacturing industry by using firm-level micro data for the period 2003–2015. By focusing on firms operating in the Turkish manufacturing sector, the study identifies the determinants of energy intensity and particularly investigates the effect of foreign direct investment on energy intensity. The results indicate that a one percent increase in labor productivity reduces energy intensity by 1.85 percent, a one percent increase in capital decreases energy intensity by 0.50 percent, and a one percent increase in total factor productivity lowers energy intensity by 0.55 percent. In addition, it is found that foreign-owned firms reduce energy intensity by 0.11 percent. The study further examines the effect of foreign investment according to the scale of the invested firms. To capture this effect more precisely, dummy variables for small, medium, and large foreign-owned firms are included in the model. The findings show that as firm size increases, energy intensity decreases. Thus, the study demonstrates that when foreign investors enter a firm, they bring technologies that reduce energy intensity and enhance efficiency. Moreover, it is observed that this effect strengthens as the scale of the firm increases.