On the Patterns of Trade Liberalization, Oligopolistic Concentration and Profitablility: Reflections from Post-1980 Tukrish Manufacturing

Abstract

In this paper we investigate the structural consequences of the post-1980 outwardorientation on the market concentration and accumulation patterns in the Turkish manufacturing industries. Using various panel data procedures over 29-subsectors of Turkish manufacturing for the period 1980-1996, we focus on three sets of issues: (i) the effect of openness on the extent of market concentration as measured in CR4 ratios; (ii) the behavior of gross profit margins (mark-ups) in relation to openness, concentration ratios, and real wage costs; and (iii) the behavior of sectoral real investments (by destination) in relation to the profit margins, real wage costs, and the openness indicator. Our results suggest very little structural change in the sectoral composition and nature of market concentration and behavior of profit margins under the post-1980 structural adjustment reforms and outward-orientation. We find that contrary to expectations, “openness” had very little impact, if any, on profit margins (mark-ups), and, within manufacturing, the trade–adjusting sectors reveal a positive relationship between the profit margins and openness. Profit margins are found to be positively and significantly related to concentration power and real wage cost increases. Real investments in the sector display positive relationship with profit margins and real wages, yet bear a statistically insignificant relationship vis-a-vis openness.

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