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Technology spillovers through foreign direct investment in turkish manufacturing industry

Omuzlu Aksoy, Yeliz
This study investigates whether there are technology spillovers through foreign direct investment (FDI) in Turkish manufacturing industry. Before the econometric estimation, theoretical and empirical literature on FDI and technology spillovers especially by transnational corporations (TNCs) is analyzed in detail. Also, historical perspective of FDI and review of the related literature for Turkey constitutes an important part of the study. To test the spillover effects of FDI, the dataset including sectoral level determinants of 89 different sectors, according to ISIC (International Standard of Industrial Classification) 4-digit industrial classification, in Turkish manufacturing industry is used. The dataset is obtained from Turkish Statistical Institute (TurkStat) for the period 1983-2001. Sectoral market shares of foreign firms are used as spillover variables; and horizontal spillovers are tested. Although some specifications of variables produce negative and insignificant results, the significant regression results show that there are positive spillover effects from foreign firms to domestic firms through horizontal spillovers. In this estimation, six different proxies of capital stock are used to test the robustness of the results; and also, spillovers are tested in terms of low-technology-using (Low-Tech) sectors and high-technology-using (High-Tech) sectors.