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Government Support and Employment of Manufacturing SMEs

Year 2024, Volume: 58 Issue: 1, 73 - 90, 31.01.2024
https://doi.org/10.51551/verimlilik.1314520

Abstract

Purpose: This study aims to examine how government incentives affect SME employment in Türkiye's manufacturing sector.
Methodology: The dataset used in this study was derived from a survey conducted by a privately owned London-based company with the assistance of Türkiye's Ministry of Industry and Technology. Ordinary least squares and two-stage least squares regression techniques were used to analyze the relationship between government incentives and employment.
Findings: In the analysis, we found that between 2013 and 2016, jobs were created by Turkish manufacturing SMEs with the use of state assistance. Firm-level characteristics, including firms' age, capacity utilization rate, and innovative activities, were also found to have a substantial impact on SME employment.
Originality: Our study is the first to examine the impact of incentives on employment in manufacturing SMEs in Türkiye using a micro dataset administered to 10.063 manufacturing firms by the Ministry of Industry and Technology.

Thanks

Abdullah Tirgil acknowledges support from the Turkish Academy of Sciences

References

  • Alt, J.E. (1985). "Political Parties, World Demand, and Unemployment: Domestic and International Sources of Economic Activity", American Political Science Review, 79(4), 1016-1040.
  • Angrist, J.D. and Pischke, J.S. (2010). "The Credibility Revolution in Empirical Economics: How Better Research Design is Taking the Con Out of Econometrics", Journal of Economic Perspectives, 24(2), 3-30.
  • Bartik, T.J. (2018). "Who Benefits from Economic Development Incentives? How Incentive Effects on Local Incomes and the Income Distribution Vary with Different Assumptions about Incentive Policy and the Local Economy", Upjohn Institute Technical Report No. 18-034.
  • Box, T.M., Watts, L.R. and Hisrich, R.D. (1994). "Manufacturing Entrepreneurs: An Empirical Study of the Correlates of Employment Growth in the Tulsa MSA and Rural East Texas", Journal of Business Venturing, 9(3), 261-270.
  • Cicero, M.T. (1999). “Cicero: On the Commonwealth and On the Laws”, ed. J G. Zetzel, Cambridge University Press, Cambridge.
  • Corseuil, C.H. and Moura, R.L.D. (2010). "The Effects of Tax Incentives for Small Firms on Employment Levels", FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 701, EPGE Brazilian School of Economics and Finance - FGV EPGE, Brazil.
  • Currie, J. and Gruber, J. (1996). "Saving Babies: The Efficacy and Cost of Recent Changes in the Medicaid Eligibility of Pregnant Women", Journal of Political Economy, 104(6), 1263-1296.
  • Çoban, A.E., Günaydın F.Y., Taşkıran-Battal, G., Manzak-Aydın G., Polat, M.B. and Özlale, Ü. (2018). “Türkiye Verimlilik Gelişim Haritası”, https://verimlilikkutuphanesi.sanayi.gov.tr/Library/ShowPDF/1481 (Accessed: 05.09.2023).
  • Dunne, T., Roberts, M.J. and Samuelson, L. (1989). "The Growth and Failure of U.S. Manufacturing Plants", The Quarterly Journal of Economics, 104(4), 671-698.
  • Eceral, T.Ö. and Köroğlu, B.A. (2015). "Incentive Mechanisms in Industrial Development: An Evaluation through Defense and Aviation Industry of Ankara", Procedia-Social and Behavioral Sciences, 195, 1563-1572.
  • Erdin, C. and Ozkaya, G. (2020). "Contribution of Small and Medium Enterprises to Economic Development and Quality of Life in Türkiye", Heliyon, 6(2), e03215.
  • Erdogan, A.A. and Del Carpio, X.V. (2019). "Turkey Jobs Diagnostic", World Bank Publications - Reports 32263, The World Bank Group.
  • Faulk, D. (2002). "Do State Economic Development Incentives Create Jobs? An Analysis of State Employment Tax Credits", National Tax Journal, 55(2), 263-280.
  • Fukanuma, H., Nemoto, T. and Watanabe, W. (2006). "Do Governmental Financial Institutions Help Startups Grow? Evidence from Japan", Keio University Working Paper.
  • Gabe, T.M. and Kraybill, D.S. (2002). "The Effect of State Economic Development Incentives on Employment Growth of Establishments", Journal of Regional Science, 42(4), 703-730.
  • Gabe, T.M. and Kraybill, D.S. (2003). "Passive Firm Learning and Employment Projection Error", Small Business Economics, 21(1), 19-26.
  • Gamberoni, E., Gradeva, K. and Weber, S. (2016). "Firm Responses to Employment Subsidies: A Regression Discontinuity Approach to the 2012 Spanish Labour Market Reform", Working Paper Series 1970, European Central Bank.
  • Hoyt, W.H., Jepsen, C. and Troske, K.R. (2008). "Business Incentives and Employment: What Incentives Work and Where?", Institute for Federalism & Intergovernmental Relations Working Paper, (2009-02).
  • Jensen, N. (2017). "Job Creation and Firm-Specific Location Incentives", Journal of Public Policy, 37(1), 85-112. DOI:10.1017/S0143814X16000039.
  • Jovanovic, B. (1982). "Selection and the Evolution of Industry", Econometrica: Journal of the Econometric Society, 649-670.
  • Kahraman, M., Tektas, A. and Coskun, A. (2019). "The Access to Finance by SMEs in Türkiye and the EU: A Comparative Study", PressAcademia Procedia, 10, 1-6.
  • Koop, G. (2005). "Analysis of Economic Data", John Wiley & Sons, Chichester.
  • Lalive, R., Wüllrich, J.P. and Zweimüller, J. (2009). "Do Financial Incentives for Firms Promote Employment of Disabled Workers? A Regression Discontinuity Approach", NRN Working Papers 2009-11, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
  • Lewbel, A. (2012). "Using Heteroscedasticity to Identify and Estimate Mismeasured and Endogenous Regressor Models", Journal of Business & Economic Statistics, 30(1), 67-80.
  • Manski, C.F. (1993). "Identification of Endogenous Social Effects: The Reflection Problem", The Review of Economic Studies, 60(3), 531-542.
  • McAleese, D. and McDonald, D. (1978). "Employment Growth and the Development of Linkages in Foreign‐Owned and Domestic Manufacturing Enterprises", Oxford Bulletin of Economics and Statistics, 40(4), 321-339.
  • Partridge, M., Schreiner, S., Tsvetkova, A. and Patrick, C.E. (2020). "The Effects of State and Local Economic Incentives on Business Start-Ups in the United States: County-Level Evidence", Economic Development Quarterly, 34(2), 171-187.
  • Patrick, C. (2014). "Does Increasing Available Non-Tax Economic Development Incentives Result in More Jobs?", National Tax Journal, 67(2), 351-386.
  • Republic of Türkiye Ministry of Development, (2014). The Tenth Development Plan 2014-2018. Retrieved from: https://faolex.fao.org/docs/pdf/tur175696.pdf, (Accessed: 06.09.2023).
  • Rolnick, A. and Burstein, M. (1995). "Congress Should End the Economic War Among the States", Essay in 1994 Annual Report of the Federal Reserve Bank of Minneapolis.
  • Thomas, K. (2010). "Investment Incentives and the Global Competition for Capital", Palgrave Macmillan, London.
  • TurkStat, (2021). “Small and Medium-Sized Enterprises Statistics”, https://data.tuik.gov.tr/Bulten/Index?p=Small-and-Medium-Sized-Enterprises-Statistics-2021-45685, (Accessed: 10.03.2023).
  • Uğurlu, S. (2020). "Do the Incentives Increase Employment? Econometric Evidence from Turkey's Economy", Theoretical and Applied Studies on Turkish Economy, I, 331-350.
  • van Ark, H.H., Frankema, E.H.P. and Duteweerd, H. (2004). “Productivity and Employment Growth: An Empirical Review of Long and Medium Run Evidence”, (GGDC Research Memorandum; No. GD-7), GGDC.
  • Voulgaris, F., Papadogonas, T. and Agiomirgianakis, G. (2005). "Job Creation and Job Destruction in Greek Manufacturing", Review of Development Economics, 9(2), 289-301.
  • Wagner, J. (1992). "Firm Size, Firm Growth, and Persistence of Chance: Testing Gibrat's Law with Establishment Data from Lower Saxony, 1978- 1989", Journal of Small Business Economics, 4(2), 125-131.
  • Walker, R. and Greenstreet, D. (1991). "The Effect of Government Incentives and Assistance on Location and Job Growth in Manufacturing", Regional Studies, 25(1), 13-30.
  • Westhead, P. and Birley, S. (1995). "Employment Growth in New Independent Owner-Managed Firms in Great Britain", International Small Business Journal, 13(3), 11-34.
  • Wooldridge, J.M. (2002). "Econometric Analysis of Cross Section and Panel Data", MIT Press, Cambridge, MA, 108(2), 245-254.
  • Yanıkkaya, H. and Karaboga, H. (2017). "The Effectiveness of Investment Incentives in the Turkish Manufacturing Industry", Prague Economic Papers, 26, 1-17. DOI:10.18267/j.pep.641.
  • Yavuz, A. (2010). “Bir Maliye Politikasi Araci Yatırım Teşviklerinin Rekabet Koşulları Altında Özel Kesim Yatırımları ve İstihdam Üzerine Etkisi: Ekonometrik Bir Analiz”, Süleyman Demirel Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 15(1), 83-101.

Devlet Desteği ve İmalat Sanayii KOBİ’lerinin İstihdamı

Year 2024, Volume: 58 Issue: 1, 73 - 90, 31.01.2024
https://doi.org/10.51551/verimlilik.1314520

Abstract

Amaç: Bu çalışma, devlet teşviklerinin Türkiye imalat sektöründe KOBİ istihdamını nasıl etkilediğini incelemeyi amaçlamaktadır.
Yöntem: Çalışmaya konu veri seti Türkiye Sanayi ve Teknoloji Bakanlığı'nın yardımıyla Londra merkezli özel bir şirket tarafından gerçekleştirilen bir anket araştırmasından edinilmiştir. Devlet teşvikleri ile istihdam arasındaki ilişkiyi analiz etmek için sıradan en küçük kareler ve iki aşamalı en küçük kareler regresyon teknikleri kullanılmıştır.
Bulgular: Çalışmada, 2013 ile 2016 yılları arasında Türk imalat KOBİ'leri tarafından devlet yardımı kullanılarak istihdam yaratıldığını bulunmuştur. Firmaların yaşı, kapasite kullanım oranı ve yenilikçi faaliyetleri gibi firma düzeyindeki özelliklerin de KOBİ istihdamı üzerinde önemli bir etkiye sahip olduğu bulunmuştur.
Özgünlük: Çalışmamız, T.C. Sanayi ve Teknoloji Bakanlığı tarafından 10.063 imalatçı firmaya uygulanan bir mikro veri setini kullanarak Türkiye'deki imalatçı KOBİ'lerde teşviklerin istihdam üzerindeki etkisini inceleyen ilk çalışmadır.

References

  • Alt, J.E. (1985). "Political Parties, World Demand, and Unemployment: Domestic and International Sources of Economic Activity", American Political Science Review, 79(4), 1016-1040.
  • Angrist, J.D. and Pischke, J.S. (2010). "The Credibility Revolution in Empirical Economics: How Better Research Design is Taking the Con Out of Econometrics", Journal of Economic Perspectives, 24(2), 3-30.
  • Bartik, T.J. (2018). "Who Benefits from Economic Development Incentives? How Incentive Effects on Local Incomes and the Income Distribution Vary with Different Assumptions about Incentive Policy and the Local Economy", Upjohn Institute Technical Report No. 18-034.
  • Box, T.M., Watts, L.R. and Hisrich, R.D. (1994). "Manufacturing Entrepreneurs: An Empirical Study of the Correlates of Employment Growth in the Tulsa MSA and Rural East Texas", Journal of Business Venturing, 9(3), 261-270.
  • Cicero, M.T. (1999). “Cicero: On the Commonwealth and On the Laws”, ed. J G. Zetzel, Cambridge University Press, Cambridge.
  • Corseuil, C.H. and Moura, R.L.D. (2010). "The Effects of Tax Incentives for Small Firms on Employment Levels", FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 701, EPGE Brazilian School of Economics and Finance - FGV EPGE, Brazil.
  • Currie, J. and Gruber, J. (1996). "Saving Babies: The Efficacy and Cost of Recent Changes in the Medicaid Eligibility of Pregnant Women", Journal of Political Economy, 104(6), 1263-1296.
  • Çoban, A.E., Günaydın F.Y., Taşkıran-Battal, G., Manzak-Aydın G., Polat, M.B. and Özlale, Ü. (2018). “Türkiye Verimlilik Gelişim Haritası”, https://verimlilikkutuphanesi.sanayi.gov.tr/Library/ShowPDF/1481 (Accessed: 05.09.2023).
  • Dunne, T., Roberts, M.J. and Samuelson, L. (1989). "The Growth and Failure of U.S. Manufacturing Plants", The Quarterly Journal of Economics, 104(4), 671-698.
  • Eceral, T.Ö. and Köroğlu, B.A. (2015). "Incentive Mechanisms in Industrial Development: An Evaluation through Defense and Aviation Industry of Ankara", Procedia-Social and Behavioral Sciences, 195, 1563-1572.
  • Erdin, C. and Ozkaya, G. (2020). "Contribution of Small and Medium Enterprises to Economic Development and Quality of Life in Türkiye", Heliyon, 6(2), e03215.
  • Erdogan, A.A. and Del Carpio, X.V. (2019). "Turkey Jobs Diagnostic", World Bank Publications - Reports 32263, The World Bank Group.
  • Faulk, D. (2002). "Do State Economic Development Incentives Create Jobs? An Analysis of State Employment Tax Credits", National Tax Journal, 55(2), 263-280.
  • Fukanuma, H., Nemoto, T. and Watanabe, W. (2006). "Do Governmental Financial Institutions Help Startups Grow? Evidence from Japan", Keio University Working Paper.
  • Gabe, T.M. and Kraybill, D.S. (2002). "The Effect of State Economic Development Incentives on Employment Growth of Establishments", Journal of Regional Science, 42(4), 703-730.
  • Gabe, T.M. and Kraybill, D.S. (2003). "Passive Firm Learning and Employment Projection Error", Small Business Economics, 21(1), 19-26.
  • Gamberoni, E., Gradeva, K. and Weber, S. (2016). "Firm Responses to Employment Subsidies: A Regression Discontinuity Approach to the 2012 Spanish Labour Market Reform", Working Paper Series 1970, European Central Bank.
  • Hoyt, W.H., Jepsen, C. and Troske, K.R. (2008). "Business Incentives and Employment: What Incentives Work and Where?", Institute for Federalism & Intergovernmental Relations Working Paper, (2009-02).
  • Jensen, N. (2017). "Job Creation and Firm-Specific Location Incentives", Journal of Public Policy, 37(1), 85-112. DOI:10.1017/S0143814X16000039.
  • Jovanovic, B. (1982). "Selection and the Evolution of Industry", Econometrica: Journal of the Econometric Society, 649-670.
  • Kahraman, M., Tektas, A. and Coskun, A. (2019). "The Access to Finance by SMEs in Türkiye and the EU: A Comparative Study", PressAcademia Procedia, 10, 1-6.
  • Koop, G. (2005). "Analysis of Economic Data", John Wiley & Sons, Chichester.
  • Lalive, R., Wüllrich, J.P. and Zweimüller, J. (2009). "Do Financial Incentives for Firms Promote Employment of Disabled Workers? A Regression Discontinuity Approach", NRN Working Papers 2009-11, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
  • Lewbel, A. (2012). "Using Heteroscedasticity to Identify and Estimate Mismeasured and Endogenous Regressor Models", Journal of Business & Economic Statistics, 30(1), 67-80.
  • Manski, C.F. (1993). "Identification of Endogenous Social Effects: The Reflection Problem", The Review of Economic Studies, 60(3), 531-542.
  • McAleese, D. and McDonald, D. (1978). "Employment Growth and the Development of Linkages in Foreign‐Owned and Domestic Manufacturing Enterprises", Oxford Bulletin of Economics and Statistics, 40(4), 321-339.
  • Partridge, M., Schreiner, S., Tsvetkova, A. and Patrick, C.E. (2020). "The Effects of State and Local Economic Incentives on Business Start-Ups in the United States: County-Level Evidence", Economic Development Quarterly, 34(2), 171-187.
  • Patrick, C. (2014). "Does Increasing Available Non-Tax Economic Development Incentives Result in More Jobs?", National Tax Journal, 67(2), 351-386.
  • Republic of Türkiye Ministry of Development, (2014). The Tenth Development Plan 2014-2018. Retrieved from: https://faolex.fao.org/docs/pdf/tur175696.pdf, (Accessed: 06.09.2023).
  • Rolnick, A. and Burstein, M. (1995). "Congress Should End the Economic War Among the States", Essay in 1994 Annual Report of the Federal Reserve Bank of Minneapolis.
  • Thomas, K. (2010). "Investment Incentives and the Global Competition for Capital", Palgrave Macmillan, London.
  • TurkStat, (2021). “Small and Medium-Sized Enterprises Statistics”, https://data.tuik.gov.tr/Bulten/Index?p=Small-and-Medium-Sized-Enterprises-Statistics-2021-45685, (Accessed: 10.03.2023).
  • Uğurlu, S. (2020). "Do the Incentives Increase Employment? Econometric Evidence from Turkey's Economy", Theoretical and Applied Studies on Turkish Economy, I, 331-350.
  • van Ark, H.H., Frankema, E.H.P. and Duteweerd, H. (2004). “Productivity and Employment Growth: An Empirical Review of Long and Medium Run Evidence”, (GGDC Research Memorandum; No. GD-7), GGDC.
  • Voulgaris, F., Papadogonas, T. and Agiomirgianakis, G. (2005). "Job Creation and Job Destruction in Greek Manufacturing", Review of Development Economics, 9(2), 289-301.
  • Wagner, J. (1992). "Firm Size, Firm Growth, and Persistence of Chance: Testing Gibrat's Law with Establishment Data from Lower Saxony, 1978- 1989", Journal of Small Business Economics, 4(2), 125-131.
  • Walker, R. and Greenstreet, D. (1991). "The Effect of Government Incentives and Assistance on Location and Job Growth in Manufacturing", Regional Studies, 25(1), 13-30.
  • Westhead, P. and Birley, S. (1995). "Employment Growth in New Independent Owner-Managed Firms in Great Britain", International Small Business Journal, 13(3), 11-34.
  • Wooldridge, J.M. (2002). "Econometric Analysis of Cross Section and Panel Data", MIT Press, Cambridge, MA, 108(2), 245-254.
  • Yanıkkaya, H. and Karaboga, H. (2017). "The Effectiveness of Investment Incentives in the Turkish Manufacturing Industry", Prague Economic Papers, 26, 1-17. DOI:10.18267/j.pep.641.
  • Yavuz, A. (2010). “Bir Maliye Politikasi Araci Yatırım Teşviklerinin Rekabet Koşulları Altında Özel Kesim Yatırımları ve İstihdam Üzerine Etkisi: Ekonometrik Bir Analiz”, Süleyman Demirel Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 15(1), 83-101.
There are 41 citations in total.

Details

Primary Language English
Subjects Public Economy, Sustainable Development, Statistics (Other)
Journal Section Araştırma Makalesi
Authors

Ali Recai Direkçi 0000-0002-0031-7986

Abdullah Tirgil 0000-0002-4491-4459

Publication Date January 31, 2024
Submission Date June 14, 2023
Published in Issue Year 2024 Volume: 58 Issue: 1

Cite

APA Direkçi, A. R., & Tirgil, A. (2024). Government Support and Employment of Manufacturing SMEs. Verimlilik Dergisi, 58(1), 73-90. https://doi.org/10.51551/verimlilik.1314520

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