Analysis of changes in the manufacturing sector`s income and employment structure in Turkey

ABSTRACT In the development process, countries come across a structural change that consists of several components: Changes of economical activities' dispersion among sectors (industrialization); at the beginning, dispersion of employment through sectors and later, usage of production factors and changes of economic activities' location; educational level of population and finally, progresses made about the distribution of income. Structural changes, occurring during the income levels increases, are analyzed by many economists. When some of the economists focus on one or several phenomena in the transformational process, others make in-depth analysis of the changes happened at all economical functions. In this study, changes of economical functions during the structural transformation process are thoroughly analyzed. These analyses showed the fact that after 1980, classical agricultural sectors of Turkey had a transformation toward manufacturing and service sectors. In detail, in the manufacturing sector, there is a structural shift from consumer products sub- sectors to the parts and machinery products (investments goods) sub- sectors. Furthermore, because of the implemented economical policies, in the manufacturing sector, ownership structure has changed from public to the private. However, in terms of employment structure and wages, there have not seen a considerable change, because of the firms' production system changes and technological progresses. In this study, Kaldor Law (which accepts that manufacturing sector is the engine of the growth) is deeply analyzed and validity of this law is tested on Turkish economy, as well. According to these analyses' outcomes, the growth rate of the manufacturing sector determines the whole economy's growth rate. In addition, employment and productivity increases in the manufacturing sector impact positively to the whole economy's employment and productivity measures.