Heterogeneous firms and exporter premia: Evidence from the Turkish manufacturing industry

Firm heterogeneity is the basic assumption of contemporary trade theory (New New Trade Theory). Firms' participation status and degree in exports constitute the most important sources of heterogeneity because exporting firms have advantages (exporter premium) compared to non-exporting firms in many respects. This thesis examines whether exporter premiums exist for the Turkish manufacturing industry and its sub-sectors. In addition, the relationships between various firm characteristics, especially exports, have been analysed. The sample covers the period between 2016:Q3-2023:Q2 and 139 firms listed on BIST. Our data set consists of firm-based (micro) data. In the study, firstly, statistical comparisons are made on both industry and sub-sector basis and it is found that exporting firms are mostly composed of larger firms, employ more employees, have higher productivity and profitability than non-exporters. Then, industry-level panel data analyses are applied for three different econometric models. According to the results of the analyses, in the first model, exports, real wages and profitability are found to increase firm productivity. In the second model, productivity and profitability increase the real wage, while exports do not have a statistically significant effect on the real wage. In the third model, it is concluded that firm size increases capital intensity, while exports and profitability have no statistically significant effect on this variable. In order to determine the effect of exports on productivity on the basis of sub-sectors, the first model was analysed with panel data analysis for seven different sub-sectors of the manufacturing industry. Accordingly, it is concluded that exports in three sub-sectors, profitability in five sub-sectors and real wages in all sub-sectors have a statistically significant and positive effect on productivity. In addition, Granger Bootstrap panel causality analysis revealed that there are causality relationships both from exports to productivity and from productivity to exports. KEYWORDS: Foreign trade, Firm heterogeneity, Exporter premia, New trade theories.