Employment effects of foreign direct investment in the Turkish manufacturing industry
Author(s)
Advisor
Böke, Selin SayekDate
2010Publisher
Bilkent University
Language
English
Type
ThesisItem Usage Stats
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Abstract
This thesis studies the causal e§ects of foreign ownership on plant employment
of varying degrees of FDI. I not only examine the employment e§ects of FDI
ináows by using standard deÖnition of FDI as is standard in the literature, but
I also look into the possible di§erentiale e§ects of di§erent levels of FDI and
identify these e§ects at the 10, 25, 50, 75 and 100 percent foreign ownership in
plants, respectively. These e§ects are tested using plant-level data from Annual
Manufacturing Industry Statistics on the Turkish Manufacturing industry. To
control for the possible selection-bias, a di§erence-in-di§erences approach is
combined with propensity score matching. The advantage of this method is
that it allows observing the divergence in the paths of employment between
the treated plants and the matched control plants. It is shown that foreign
acquisition in Turkish manufacturing industry leads to a signiÖcant increase
in employment in the acquired plants when the standard deÖnition of FDI is
used. The positive and statistically signiÖcant e§ects become visible in the
acquisition year and continue in the subsequent periods. I Önd that after three
years, the acquired plants outperform the control group in terms of employment
by 21 percentage points. The signiÖcant positive employment e§ects are also
observed when I only focus on the private establishments, excluding public
establishments from the sample. The analysis also suggests that the positive
employment e§ects occur together with increases in output and productivity.
However, it is observed that as the dominance of foreign partners increases in
foreign ownership percentages the employment e§ects of FDI ináows begin to
decrease.