An Anatomy of Productivity in Turkey in the AKP Era through a Political Economy Lens

The main aim of the current paper is to investigate the productivity dynamics of Turkish economy between 2003-2015, during the Adalet ve Kalkınma Partisi (AKP) era, to contribute to the ongoing discussions of long-term economic growth of the country, using a unique data set and firm-level granular productivity analysis. Furthermore, the political economy of the deindustrialization of Turkey is scrutinized as a complement to the productivity analysis. Among a plethora of results, the following three are the most important ones in terms of their policy implications: (i) The aggregate productivity figures underestimate the productivity improvements in the manufacturing sector and overestimate the productivity losses in the services sector. (ii) The productivity growth of manufacturing sector in Turkey has been positive yet evolving towards medium-low tech manufacturing which displays the lowest productivity growth among all manufacturing sectors. (iii) While the surviving firms in the Turkish manufacturing sector have increased their own productivity in the AKP era, in the services sector surviving firms had a negative contribution to aggregate productivity growth