A Regional and sectoral analysis on production technology dynamics of manufacturing industries in Turkey

This thesis estimates regional and sectoral total factor productivity (TFP) using firm-level data on Turkish manufacturing industry over the 2003-2012 period to understand whether there is a parallelism between differences in TFP levels and differences in income per capita across regions. As propounded by Prescott (1998), TFP theory is utilized to explain international income differences in the existing literature. However, it still remains an interesting topic to study regional differences within countries and this thesis contributes to the literature with an empirical evidence from Turkey’s regions. Based on the results obtained from different estimation methods, there is a significant heterogeneity across sectors and firms in the same sector in the micro-level and this results in different average TFP levels for regions at macro-level. Our findings suggest that discrepancies in regional TFP levels are determined by technological dynamics of the industries that are dense in those regions. Thus, different sector abundance in different regions may be one of the factors for different levels of income per capita among regions.