Export Behavior of Turkish Manufacturing Firms Under Crises

Export Behavior of Turkish Manufacturing Firms Under Crises

18/02

January 2018

Turkey experienced three economic crises in recent decades that provides natural experiment environment for researchers. In this paper, we studied the impact of recent three different economic crisis on export behavior of Turkish manufacturing firms using firm level annual panel data for 1990-2014 period. By investigating the impact of crisis on both the decision to become an exporter and volume of exports, export behavior of Turkish manufacturing firms under crisis is diagnosed. Estimation results reveal differentiated impact of different types of crisis on export behavior of Turkish manufacturing firms. According to the results, export boom observed with 1994 crisis was mainly due to the increase in extensive margin. Devaluated currency together with shrinking domestic demand in 1994 crisis lead to an increase in export propensity of the firms. Although sharp currency devaluation and domestic demand contraction supported incumbent exporters to increase their export volume, the accompanied credit crunch in 2001 crisis hindered entrance of new firms into export markets. Significant international trade collapse with 2008 global financial crisis caused declines in both export propensity and export volume of the Turkish manufacturing firms. These findings have implications on both what types of export promotion and incentives should be provided (or not) and to whom this assistance should be provided for dissimilar shocks in an emerging market economy like Turkey.