IMPORT SUBSTITUTION UNDER CURRENCY DEPRECIATION: EXPORTERS VERSUS LOCALLY ORIENTED FIRMS

Date

2024-5-14

Author

Özel, Orhun

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This study examines the import intensities of Turkish manufacturing firms after a large exchange rate shock using heterogeneities between exporters and domestic sellers in a difference-in-differences setup. The results indicate that the exchange rate shock lowered the overall import intensities of investigated firms. The sudden depreciation affected domestic sellers considerably more than exporters, forcing them to decrease their imports and turn to local alternatives more than exporters. Further, the rationale behind the differentiation is investigated by analyzing various firm characteristics. The results suggest that the difference between domestic sellers and exporters is prevalent for high technology sectors, for firms producing more complex products, and for firms producing lower domestic value-added products. In these groups, exporters do not switch to local alternatives as much as domestic sellers. The decision to switch to domestic alternatives is sensitive to the existence of qualified domestic substitutes for currently imported intermediate inputs, particularly for the exporters.

Subject Keywords

Trade Balance, Import Decision, Exchange Rate Shock, Heterogenous Firms, Difference-in-Differences

URI

https://hdl.handle.net/11511/109454

Collections

Graduate School of Social Sciences, Thesis