The impact of technology spillovers on total factor productivity in Turkey: An autoregressive distributed lag modelling approach

In this study, it is aim to investigate the impact of the research and development (R&D) capital stock as a indicator of technology diffusion, on Turkey's total factor productivity (TFP) by using autoregressive distributed lag model (ARDL). When the period 1992-2013 is considered, data have been used from eight countries, which are effective on Turkey's foreign direct investment (FDI) and play a decisive role on goods and services imports of Turkey. Results show that domestic R&D capital stock has a positive effect on the productivity growth in Turkey in the long-term. To determine the long-term relationship, ARDL bound test approach which has logarithmic transformation of variables, is established. Accordingly, a one percent increase in domestic R&D capital stock value, in the sense of economic productivity is increased by 0.93 percent in the long-term. In long-term variables of the FDI-weighted and import-weighted R&D capital stock are also statistically insignificant on TFP in Turkey. Error correction term was found to be statistically significant and it's value -0605. The value indicated that the process of adapting convergence of TFP is very quickly. In any extraordinary situation in Turkey in a year to balance against can be corrected by approximately 60 percent the following year. However, in the short term, domestic R&D capital stock and import-weighted R&D capital stock values on TFP are statistically significant but have a negative impact in Turkey. Between the FDI-weighted R&D capital stock and productivity gains yielded a statistically insignificant relationship. Keywords: Total Factor Productivity, R&D, ARDL, Foreign Direct Investment, Turke