THE EFFECTS OF TRADE AND PRODUCTIVITY ON EMPLOYMENT IN THE MANUFACTURING INDUSTRY OF TURKEY

This study empirically analyzes the effects of international trade and productivity on employment in the Turkish manufacturing industry for the time period of 2003-2010 by using panel data. For this purpose, - the direct effects and - productivity related indirect effects of international trade on employment are estimated. The findings suggest that the direct effects of export demand and import competition on employment are sound and significant; while the increase in export demand leads to an increase in labour demand, the increase in import penetration reduces it. However, the productivity related indirect effects come solely from import competition. The total effects of international trade on emploment is mainly the result of the direct effects of export demand and import penetration. On the other hand, the positive contribution to productivity in the Turkish manufacturing industry comes mainly from investment and research development expenditures.