De-industrilaziton in Turkey and the determinants of de-industrialization: ARDL approach and decomposition analysis

In this study is tested for the existence of de-industrialization in Turkish economy for the period 1990-2018 and is try to analyze the determinants of de-industrialization. The decrease in the manufacturing industry value added and employment shares are accepted as the two main indicators of de-industrialization whereas causes many economic and social problems with the country, by transforming the countries into service economies. In this regard, to analyze the causes and determinants of the decrease in the share of value added and employment is an important fact to define the dimensions of emerging economic problems. In the first section of the study, based on the relevant discussions on structural transformation, economic development and industrialization, the literature on de-industrialization would be reviewed and the given theoretical framework would be defined. In the second section, the evolution and change of the manufacturing industry in Turkey is examined by taking into account various indicators and the de-industrialization tendencies are tried to be determined within the sub-periods. In the third and fourth sections, the validity of de-industrialization is tested based on the framework defined in the first sections and the determinants of the de-industrialization is tried to be analyzed empirically. In the study, it is found out that the de-industrialization tends to occur in Turkish economy in terms of employment. At the same time, based on this result and the empirical findings, it has been revealed that the tendency of de-industrialization in employment is mostly due to productivity increases as a natural result of the economic development and structural transformation process.