Total factor productivity and sustainable export increases: A computable general equilibrium analysis for Turkey

There is an intense literature examining the relationship between Total Factor Productivity (TFP) and exports in the context of country, sector or firm level. The literature suggests a positive correlation between TFP and exports, while different outcomes exist regarding the direction of causality in this relationship. Recent studies, most of firm-level based, support the proposition that this relationship has causality from TFP increase to exports. In addition, there exists no comprehensive study concerning the impact of TFP increases on exports performance of Turkey although some of them are exploring TFP-export relationship within the context of testing the Export-led Growth Model for Turkish economy. The aim of this study is to analyze the prospective impacts of TFP increases, which are targeted under the 10th Development Plan, on sectoral exports as of 2027 using a dynamic CGE Model (the GTAP model) and GTAP 9 database.