An Analysis of the Growth of the Turkish Manufacturing Industry

Abstract: The basic aim of this study is to investigate the sources of growth in the Turkish manufacturing industry between 1992 and 2001. For this purpose, a two-deflator growth accounting approach is applied; this new methodology is based on the theory of capital, not the theory of production as in the traditional approach. It is superior to the traditional approaches in many ways. The model used here has many advantages over the Solow type of model of growth. The measurement of growth at the disaggregated level can resolve many macroeconomic issues, which is not possible in an aggregated framework. The disaggregated empirical analysis finds that the contribution of capital explains most of the growth of the value added in the Turkish manufacturing industry, although the contribution of labor to value-added growth is by no means insignificant.