Erol Taymaz

Who Benefits from Training and R&D, the Firm or the Workers?

The present paper offers a novel study of the effects of intangible assets on wages and productivity. Training, R&D and physical capital are all taken into account, and their joint effects are examined. We use panels of firms in order to control for unobserved fixed effects and the potential endogeneity of training and R&D, using data for France and Sweden. The estimation of productivity and wage equations allows us to show how the benefits of investment in physical capital, training and R&D are shared between the firm and the workers. We found that firms indeed obtain the largest part of the returns to their investments, but their share is relatively lower for intangible assets (R&D and training) than for physical capital.

Firms' human capital, R&D and performance: a study on French and Swedish firms

Abstract This paper studies the effects of human and technological capital on productivity in a sample of large French and Swedish firms. While the role of technological capital as measured by R&D has been intensively investigated, almost no work has been done on the role of human capital as measured by firm-sponsored training and even less its interaction with technological capital. The level of intangible capital may also have a lasting effect on productivity growth, as emphasised by some endogenous growth models in a macroeconomic setting. The study uses data from two panels of large French and Swedish firms for the same period (1987–1993). It constructs measures of a firms human capital stock, based on their past and present training expenditures. The results confirm that firm-sponsored training and R&D are significant inputs in the two countries, although to a different extent, and have high returns. However, except for managers and engineers in France, we do not find evidence of positive interactions between these two types of capital. Finally, growth effects at the firm level do not appear.

Technical Change and Efficiency in Turkish Manufacturing Industries

Technical progress and production efficiency are central to economic growth and international competitiveness. However, these topics received little attention in Less Developed Countries. This study is the first attempt to measure and to understand the extent and importance of technical progress and efficiency in Turkish manufacturing industries. Stochastic production frontiers for Turkish textile, cement, and motor vehicles industries are estimated by using panel data of plants for the years 1987 to 1992. The rate and direction of technical change for each industry are estimated by introducing time-dependent variables in the production function. Sector-specific factors which influence technical efficiency of manufacturing plants are also identified.

Determinants of subcontracting and regional development: An empirical study on Turkish textile and engineering industries

Taymaz E. and Kiliçaslan Y. (2005) Determinants of subcontracting and regional development: an empirical study on Turkish textile and engineering industries, Regional Studies 39 , 633–645. Recent studies on small‐ and medium‐sized establishments emphasize the importance of networking and regional clusters for (regional) industrial development. This study is focused on an important form of cooperation between firms: the subcontracting relationship. The aim is to identify the determinants of subcontracting in Turkish textile and engineering industries and to derive policy implications from our empirical analysis. Subcontract offering and subcontract receiving models are estimated for both industries by using panel data on all establishments employing ten or more workers between 1993 and 2000. The findings show that a short‐term/unequal relationship exists between clients and subcontractors in the textile industry, whereas subcontracting relationships in the engineering industry are established between ‘similar’, relatively advanced firms with complementary assets and technologies. Moreover, subcontracting flourishes in regions densely populated by firms.

To Innovate or to Transfer? A Study on Spillovers and Foreign Firms in Turkey

FDI has been considered by many development economists as an important channel for transfer of technology to developing countries. It is suggested that modern, advanced technologies introduced by multinational firms can diffuse to domestic firms through spillovers. In this paper, we study innovation and technology transfer activities of domestic and foreign firms in Turkish manufacturing industries, and the impact of horizontal, vertical and labor spillovers on these activities. Our analysis shows that foreign firms are more innovative than their domestic counterparts, and transfer technology from abroad (mostly from their parent companies). Horizontal spillovers from foreign firms seem to be insignificant. The effects of foreign firms on technological activities of other firms in vertically related industries are ambiguous. High-tech suppliers tend to have a high rate of innovation when the share of foreign users is high, but the opposite is true for users: high-tech users supplied mainly by foreign firms tend to have a lower rate of innovation. Labor turnover is found to be the main channel of spillovers. Our findings reiterate the importance of tacitness of knowledge, and confirm that technology cannot easily be transferred through passive mechanisms.

To innovate or to transfer

FDI has been considered by many development economists as an important channel for transfer of technology to developing countries. It is suggested that modern, advanced technologies introduced by multinational firms can diffuse to domestic firms through spillovers. In this paper, we study innovation and technology transfer activities of domestic and foreign firms in Turkish manufacturing industries, and the impact of horizontal, vertical and labor spillovers on these activities. Our analysis shows that foreign firms are more innovative than their domestic counterparts, and transfer technology from abroad (mostly from their parent companies). Horizontal spillovers from foreign firms seem to be insignificant. The effects of foreign firms on technological activities of other firms in vertically related industries are ambiguous. High-tech suppliers tend to have a high rate of innovation when the share of foreign users is high, but the opposite is true for users: high-tech users supplied mainly by foreign firms tend to have a lower rate of innovation. Labor turnover is found to be the main channel of spillovers. Our findings reiterate the importance of tacitness of knowledge, and confirm that technology cannot easily be transferred through passive mechanisms.

Flexible Technology and Industrial Structure in the U.S

This paper analyzes the development over the postwar period of output, employment, and the number of plants in manufacturing in the United States. It is shown that the distribution of flexible technology in the form of machine tools (NCMTs) shifted markedly toward small plants during the 1980s. It is found that the probability of adoption and the penetration rate of NCMTs are higher in large than in small plants, even though the number of NCMTs per worker is much higher in small plants. This apparent paradox is explained. It is also suggested that the shift of output towards smaller plants is correlated with the increased use of flexible technology, and that this reflects changes in the division of labor among plants of various sizes, as well as changes in the composition and organization of production in large plants.

Training policies and economic growth in an evolutionary world

Abstract The role of training and human capital accumulation as a source of innovation and growth is studied within an evolutionary microsimulation model. Firms within the model learn about technology through radical/incremental innovation and imitation. General human capital increases the probability of innovation whereas specific human capital increases technical efficiency. Firms endogenously determine the level of investment in fixed and current assets, R&D activities, and education and training. Human capital accumulation through investment in education and training is shown to be a source of economic growth even though firms tend to under-invest in these activities because they cannot fully recoup training costs when workers quit. The paper investigates the effects of various training policies on macro-performance. The first policy is to subsidise all education and training activities. The second policy requires firms to spend a certain percentage of the wage bill on training activities. In the third case, the government subsidises training activities if the firm hires unemployed people, and pays the social security contributions for 1 year. We experiment with these policies because many European countries adopt similar policies to cure the unemployment problem and to enhance economic growth. By running 101 experiments for each policy, increasing the parameter value step by step, we are able to test the impact of training policies on macro-economic performance (manufacturing growth rates, unemployment, etc.), and to estimate policy elasticities through econometric techniques. The results suggest that some subsidy policies are effective in improving the long-run macro-performance while a minimum requirement to train set upon firms is not.

Integration with the Global Economy: The Case of Turkish Automobile and Consumer Electronics Industries

This paper provides an extensive case study of the Turkish automotive and the consumer electronics industries. Despite a macroeconomic environment that inhibits investment and growth, both industries have achieved remarkable output and productivity growth since the early 1990s. Although there are similarities between the performances of the two industries, there are significant differences between their structures, links with domestic suppliers, technological orientation, and modes of integration with the global economy. The automobile industry is dominated by multinational companies, has a strong domestic supplier base, and has seized the opportunities opened up by the Customs Union by investing in new product and process technology and learning. The consumer electronics industry is dominated by a few, large, domestic firms, and has become competitive in the European market thanks to its geographical proximity, productive domestic labor, and focus on a protected and technologically mature segment of the market, which also helps explain the recent decline in industrys fortunes. These industries could have performed even better had more responsive macroeconomic policies been adopted. It is certain that governments could be more responsive only if far-reaching political/institutional reforms are undertaken by changing the constitution and current political party and election laws in order to establish public control over the political elites.

Institutions, entrepreneurship, economic flexibility and growth - experiments on an evolutionary micro-to-macro model

The capacity of an economic system to grow through competitive entry and flexible adjustment is investigated on a firm based evolutionary simulation model of the Swedish economy. Entry, speed of exit and of labor market reallocation define flexibility. Entry is determined by observed profit opportunities in markets and growth, among other things, through dynamic competition by way of entry. Both entry and growth ultimately depend on the existence of property rights institutions that reduce the uncertainty surrounding private access at any time to the expected present value of future profits from investment commitments today.