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Trade liberalization and innovation decisions of firms: Lessons from Post-1980 Turkey

Determinants of innovation decisions of Turkish manufacturing firms are estimated for 1989-93, with an emphasis on determinants that are linked to trade policy reforms of the 1980s. Using plant-level data, we find that positive effects of trade liberalization on innovation decision are transmitted mainly through technology embodied in imported machinery. Being a technology licensee, an exporter, or having a foreign partner does not exert a significant positive effect on a firm's probability to innovate, nor do technology spillovers due to the presence of foreign firms in the Turkish manufacturing industry.