Closing the productivity gap and trade *policy

The relationship between trade policy and productivity growth is regarded as ambiguous in the literature. This dissertation examines under what condition the relationship would be positive (or negative). Through the use of static and dynamic analysis, we find two conflicting effects (the pro-protection effect and the pro-competitive effect) that cause the relationship to be ambiguous. If there exists a productivity gap between the import-competing and foreign industries, and if the level of protection is low (high), the relationship is positive (negative). We also show that the import-competing firm responds to a change in the protection level by choosing a level of investment in innovation which yields a different rate of productivity growth. The policy implication, therefore, is that a trade-policy maker should set the trade protection at a level which induces the firm to choose the highest rate of productivity growth, and, as a result, leading the firm to close the initial productivity gap in the most efficient way. ^

Essays on administrative protection and trade deflection

This dissertation analyzes the trading effects and the politics of antidumping. The first essay empirically examines the influence of partisanship on antidumping. I show that an increase in the leftist orientation of the government makes labor intensive industries less likely to file an antidumping petition. I also demonstrate that the increase in the leftist orientation of the government is associated with an increase in the likelihood of an affirmative antidumping outcome for the petitions of labor intensive industries. The second essay investigates the effect of past exporting relationships of the firms, whose products are targeted by antidumping duties, on their export flows to alternative markets. My estimations show that facing an antidumping duty on a product leads to a 18% increase in the exports of the firm for that product to the alternative countries where the firms previously exported the same product and a 8% increase to the countries where the firms exported another product. On the contrary, I fail to find a significant effect of antidumping duties on the exports of the particular product to third countries to which the firm did not export before. Further, I show that a firm’s probability to start exporting the duty imposed product in a different destination increases by 8–10% if the firm already exported another product to that destination. However, I find no such evidence for the countries to which the firm did not export before. The third essay empirically analyzes the effect of potential antidumping claims, resulting from an antidumping investigation in the domestic market, on the quality of exported products to the target countries. My findings suggest that retaliation threats increase the quality of firms’ shipments for the named industries’ products to the target countries by 11%. This effect is also significantly increasing in the share of the exports of the named industries’ products shipped to the target country in the firms’ total exports. Further, I show that this effect is 4% higher for the exporters serving the developed countries and 3% higher for ones serving the heavy antidumping users.

Essays on the political economy of trade policy and economic *development

This dissertation studies the political economy of trade policy in a developing country, namely Turkey, under different economic and political regimes. The research analyzes the effects of these different regimes on the import structure, the trade policy and the industrialization process in Turkey and derives implications for aggregate welfare. ^ In the second chapter, the effects of trade liberalization policies on import demand are examined. Using disaggregated industry-level data, import demand elasticities for various sectors have been computed, analyzed under different economic regimes, and compared with those of developed countries. The results are statistically significant and reliable, and conform to the predictions of economic theory. Estimation of these elasticities is also a necessary ingredient for the third chapter of the dissertation. ^ The third chapter examines the predictions of the state-of-the-art “Protection For Sale” model of Grossman and Helpman (1994). Employing advanced econometric methods and a unique data set, strong support is found for the fundamental predictions of the model in the context of Turkey. Specifically, the government is found to attach a much higher weight to social welfare than to political contributions. This weight is higher under the democratic regime than under the dictatorship, a result potentially of interest to all researchers in the area of political economy. ^ The fourth chapter looks at the effects of industry concentration and import price shocks on protection, promotion and the choice of policy instruments in Turkey. In this context, it examines and finds support for the predictions of some well-known models in the literature. ^