Labour productivity analysis of manufacturing sector in Turkey against EU
This study offers an in-depth analysis of labour productivity of manufacturing sector in Turkey and provides a comparison with EU27 and EA19 countries utilizing Eurostat time series data of 63 quarters covering 2005/first quarter-2020/third quarter time interval. Productivity trends are identified and interpreted by relating them with the key macroeconomic events and factors. Multiple linear and non-linear regression equations, and ARIMA model with different parameters are applied to the time series data considering the periods with and without covid effect. Future projections are made for the periods 2020–2023 for Turkey manufacturing sector based on the best fitting regression and ARIMA solutions and they are compared. Findings revealed that extreme covid conditions of even two quarters of data have significant impact on the forecasted values for Turkey, EU27 and EA19 countries. ARIMA analysis with 12 different parameter settings provided accurate results, supported by Thiel’s inequality coefficients and standard error measures. Analysis has shown consistent patterns between EA19 and EU27 countries. ARIMA results represent better compatibility with the regression results for Turkey. Study is valuable by providing comprehensive and comparative analysis, revealing future forecasts and covid effect and degree of recovery from the pandemic.
Keyword : labour productivity, manufacturing, linear regression, ARIMA, Turkey, EU
This work is licensed under a Creative Commons Attribution 4.0 International License.
Asada, H. (2020). Impacts of sectoral labour productivity growth of emerging countries in East Asia. Economics Bulletin, 40(2), 906–919.
Bakas, D., Kostis, P., & Petrakis, P. (2020). Culture and labour productivity: An empirical investigation. Economic Modelling, 85, 233–243. https://doi.org/10.1016/j.econmod.2019.05.020
Balakrishnan, R., Brooks, P., Leigh, D., Tytell, I., & Abiad, A. (2009). What’s the damage? Medium-term output dynamics after financial crises. In World Economic Outlook (pp. 121–151).
Balk, B. M. (2014). Dissecting aggregate output and labour productivity change. Journal of Productivity Analysis, 42(1), 35–43. https://doi.org/10.1007/s11123-013-0359-6
Balkan, D., & Suiçmez, H. (2017). Türkiye ve dünyada işgücü verimliliğinin karşılaştırmalı analizi. Verimlilik Dergisi, (1), 93–113. https://dergipark.org.tr/tr/pub/verimlilik/issue/28662/306327
Basic, F. (2020). Utjecaj političke stabilnosti na produktivnost rada u postsocijalističkom dijelu Europske unije. Hrvatska i komparativna javna uprava, 20(1), 171–192. https://doi.org/10.31297/hkju.20.1.7
Beugelsdijk, S., Klasing, M., & Milionis, P. (2018). Regional economic development in Europe: The role of total factor productivity. Regional Studies, 52(4), 461–476. https://doi.org/10.1080/00343404.2017.1334118
Bhattacharya, P., & Rath, B. N. (2020). Innovation and firm-level labour productivity: A comparison of Chinese and Indian manufacturing based on enterprise surveys. Science, Technology and Society, 25(3), 465–481. https://doi.org/10.1177/0971721820912902
Bliemel, F. (1973). Theil’s forecast accuracy coefficient: A clarification. Journal of Marketing Research, 10(4), 444–447. https://doi.org/10.1177/002224377301000413
Brondino, G. (2019). Productivity growth and structural change in China (1995–2009): A subsystems analysis. Structural Change and Economic Dynamics, 49, 183–191. https://doi.org/10.1016/j.strueco.2018.09.001
Calcagnini, G., Marin, G., & Perugini, F. (2021). Labour flexibility, internal migration and productivity in Italian regions. Structural Change and Economic Dynamics, 57, 308–320. https://doi.org/10.1016/j.strueco.2021.04.004
Casola, P. D., Riksbank, S., & Berlin, M. P. (2020). Effect of Covid-19 on global productivity (Stockholm School of Economics Report). https://www.hhs.se/sv/forskning/sse-corona-economic-research-network/research-reports/2020/effect-of-covid-19-on-global-productivity/
Castellani, D., Piva, M., Schubert, T., & Vivarelli, M. (2019). R&D and productivity in the US and the EU: Sectoral specificities and differences in the crisis. Papers in Innovation Studies, 138(C), 279–291. https://doi.org/10.1016/j.techfore.2018.10.001
Chugaievska, S., Filipowicz, K., Tokarski, T., & Wisła, R. (2020). Labour productivity simulations in Ukrainian regions: Analysis based on a gravitational growth model. Economics and Sociology, 13(4), 43–60. https://doi.org/10.14254/2071-789X.2020/13-4/3
Coccia, M. (2009). What is the optimal rate of R&D investment to maximize productivity growth?. Technological Forecasting and Social Change, 76(3), 433–446. https://doi.org/10.1016/j.techfore.2008.02.008
Conceição, P., & Ferreira, P. (2000). The young person’s guide to the Theil index: Suggesting intuitive interpretations and exploring analytical applications (UTIP Working Paper Number 14). https://doi.org/10.2139/ssrn.228703
Cristea, M., Noja, G. G., Dănăcică, D. E., & Ştefea, P. (2020). Population ageing, labour productivity and economic welfare in the European Union. Economic Research-Ekonomska Istraživanja, 33(1), 1354–1376. https://doi.org/10.1080/1331677X.2020.1748507
Dieppe, A., Kilic-Celik, S., & Kindberg-Hanlon, G. (2020). Global productivity: trends. drivers, and policies, International Bank for reconstruction and development, The World Bank. https://doi.org/10.1596/978-1-4648-1608-6_ch1
Dieppe, A. (2020). Global productivity. The World Bank. https://doi.org/10.1596/978-1-4648-1608-6_ch1
Diewert, W. E. (2015). Decompositions of productivity growth into sectoral effects. Journal of Productivity Analysis, 43(3), 367–387. https://doi.org/10.1007/s11123-014-0392-0
Dua, P., & Garg, N. K. (2019). Determinants of labour productivity: Comparison between developing and developed countries of Asia‐Pacific. Pacific Economic Review, 24(5), 686–704. https://doi.org/10.1111/1468-0106.12294
Elshennawy, A., & Bouaddi, M. (2021). Sources of firm-level heterogeneity in labour productivity in Egypt’s manufacturing sector. Empirical Economics, 60, 2589–2612. https://doi.org/10.1007/s00181-020-01847-x
Erber, G., Fritsche, U., & Harms, P. C. (2017). The global productivity slowdown: Diagnosis, causes and remedies. Intereconomics, 52(1), 45–50. https://doi.org/10.1007/s10272-017-0642-2
Erzan, R., & Filiztekin, A. (2005). Does size matter in growth, productivity, employment and vulnerability/flexibility in Turkish manufacturing?. Turkish Studies, 6(1), 113–126. https://doi.org/10.1080/1468384042000339357
Essletzbichler, J., & Kadokawa, K. (2010). The evolution of regional labour productivities in Japanese manufacturing, 1968–2004. Regional Studies, 44(9), 1189–1205. https://doi.org/10.1080/00343400903365060
European Union. (2021). About the EU. Retrieved March 5, 2021 from https://europa.eu/european-union/about-eu/countries_en
Eurostat. (2021). European statistical recovery dashboard. Retrieved February 15, 2021 from https://ec.europa.eu/eurostat/web/main/data/database
Evans, A. E. (2020). Average labour productivity dynamics over the business cycle. Empirical Economics, 59(4), 1833–1863. https://doi.org/10.1007/s00181-019-01699-0
Fatima, S. T. (2016). Productivity spillovers from foreign direct investment: evidence from Turkish micro-level data. The Journal of International Trade & Economic Development, 25(3), 291–324. https://doi.org/10.1080/09638199.2015.1050057
Feder, C. (2018). The effects of disruptive innovations on productivity. Technological Forecasting and Social Change, 126(C), 186–193. https://doi.org/10.1016/j.techfore.2017.05.009
Frost, J. (2013). Regression Analysis: An intuitive guide for using and interpreting linear models. Statistics By Jim Publishing.
Ganau, R., & Rodríguez‐Pose, A. (2019). Do high‐quality local institutions shape labour productivity in Western European manufacturing firms?. Papers in Regional Science, 98(4), 1633–1666. https://doi.org/10.1111/pirs.12435
Giordano, C., & Lopez-Garcia, P. (2021). Firm heterogeneity and international trade: A cross-country analysis within the EU. The Journal of International Trade & Economic Development, 30(1), 68–103. https://doi.org/10.1080/09638199.2020.1788123
Grenčíková, A., & Berkovic, V. (2020). Impact of Industry 4.0 on labor productivity in the Slovak Republic. Problems and Perspectives in Management, 18(2), 396–408. https://doi.org/10.21511/ppm.18(2).2020.32
Hammouda, H. B., Karingi, S. N., Njuguna, A. E., & Jallab, M. S. (2010). Growth, productivity and diversification in Africa. Journal of Productivity Analysis, 33(2), 125–146. https://doi.org/10.1007/s11123-009-0155-5
Hazrati, A. (2016). Predicting construction labor productivity with Bayesian belief networks [Doctoral dissertation]. The University of Nebraska, Lincoln, USA.
Herman, E. (2020). Labour productivity and wages in the Romanian manufacturing sector. Procedia Manufacturing, 46, 313–321. https://doi.org/10.1016/j.promfg.2020.03.046
Holman, C., Joyeux, B., & Kask, C. (2008). Labour productivity trends since 2000, by sector and industry. Monthly Labor Review, 131, 64–82.
International Labor Organization. (2021). Why would labour productivity surge during a pandemic?. Retrieved December 14, 2021, from https://ilostat.ilo.org/why-would-labour-productivity-surge-during-a-pandemic/
Jangam, B. P. (2021). Global value chain embeddedness, labour productivity and employment in the Asia-Pacific countries. Studies in Economics and Finance, 38(2), 339–360. https://doi.org/10.1108/SEF-10-2019-0408
Jarrett, J. E., & Kyper, E. (2011). ARIMA modeling with intervention to forecast and analyze Chinese stock prices. International Journal of Engineering Business Management, 3(3), 53–58. https://doi.org/10.5772/50938
Karadağ, M., Önder, Ö., & Deliktaş, E. (2005) Growth of factor productivity in the Turkish manufacturing industry at provincial level. Regional Studies, 39(2), 213–223. https://doi.org/10.1080/003434005200060007
Khanh, H. D., & Kim, S. Y. (2022). Construction productivity prediction through Bayesian networks for building projects: Case from Vietnam. Engineering, Construction and Architectural Management. https://doi.org/10.1108/ECAM-07-2021-0602
Kiliçaslan, Y., Erdogan, L., Uslu, N. C., & Esen, E. (2007) Technology, specialisation and productivity in manufacturing industry. İktisat İşletme ve Finans, 27(314), 9–33. https://doi.org/10.3848/iif.2012.314.3164
Kılıçaslan, Y., Sickles, R. C., Kayış, A. A., & Gürel, Y. Ü. (2017). Impact of ICT on the productivity of the firm: evidence from Turkish manufacturing. Journal of Productivity Analysis, 47(3), 277–289. https://doi.org/10.1007/s11123-017-0497-3
Kim, K. Y., & Patel, P. C. (2020). Broad‐based employee ownership and labour productivity during the 2008 recession: Evidence from public firms in Europe. British Journal of Industrial Relations, 58(2), 396–423. https://doi.org/10.1111/bjir.12508
Ko, Y., & Han, S. (2015). Development of construction performance monitoring methodology using the Bayesian probabilistic approach. Journal of Asian Architecture and Building Engineering, 14(1), 73–80. https://doi.org/10.3130/jaabe.14.73
Kohlrausch, J., & Brin, E. A. (2020). ARIMA supplemented security metrics for quality assurance and situational awareness. Digital Threats: Research and Practice, 1(1), 1–21. https://doi.org/10.1145/3376926
Legros, D., & Galia, F. (2012). Are innovation and R&D the only sources of firms’ knowledge that increase productivity? An empirical investigation of French manufacturing firms. Journal of Productivity Analysis, 38(2), 167–181. https://doi.org/10.1007/s11123-011-0254-y
Leuthold, R. M. (1975). On the use of Theil’s inequality coefficients. American Journal of Agricultural Economics, 57(2), 344–346. https://doi.org/10.2307/1238512
Lishchuk, E. N., & Kapelyuk, S. D. (2020). Socio-demographic potential of regional development. Economy of Region. Retrieved December 14, 2021, from https://www.economyofregion.com/author/S.+D.+Kapelyuk/
Liu, F., Dutta, D. K., & Park, K. (2021). From external knowledge to competitive advantage: absorptive capacity, firm performance, and the mediating role of labour productivity. Technology Analysis & Strategic Management, 33(1), 18–30. https://doi.org/10.1080/09537325.2020.1787373
Liu, T. K., Chen, J. R., Huang, C. J., & Yang, C. H. (2014). Revisiting the productivity paradox: A semiparametric smooth coefficient approach based on evidence from Taiwan. Technological Forecasting and Social Change, 81, 300–308. https://doi.org/10.1016/j.techfore.2013.04.007
Mandrikova, O., Fetisova, N., & Polozov, Y. (2021). Hybrid model for time series of complex structure with ARIMA components. Mathematics, 9(10), 1122. https://doi.org/10.3390/math9101122
Manyika, J., Chui, M., & Miremadi, M. (2017). A future that works: AI, automation, employment, and productivity (McKinsey Global Institute Research Technical Report No 60).
Margaritis, D., Färe, R., & Grosskopf, S. (2007). Productivity, convergence and policy: a study of OECD countries and industries. Journal of Productivity Analysis, 28(1), 87–105. https://doi.org/10.1007/s11123-007-0044-8
Mawejje, J., & Okumu, I. M. (2018). Wages and labour productivity in African manufacturing. African Development Review, 30(4), 386–398. https://doi.org/10.1111/1467-8268.12346
Mebratie, A. D., & Bedi, A. S. (2013). Foreign direct investment, black economic empowerment and labour productivity in South Africa. The Journal of International Trade & Economic Development, 22(1), 103–128. https://doi.org/10.1080/09638199.2013.745287
Mecik, O. (2015). OECD ülkelerinde bilgi ve iletişim teknolojilerinin işgücü verimliliği üzerindeki etkisi. Yönetim ve Ekonomi Araştırmaları Dergisi, 13(1), 74–84. https://doi.org/10.11611/JMER414
Medda, G., & Piga, C. A. (2014). Technological spillovers and productivity in Italian manufacturing firms. Journal of Productivity Analysis, 41, 419–434. https://doi.org/10.1007/s11123-013-0351-1
Melchor-Ferrer, E. (2020). Determinants of labour productivity growth in Spanish and Portuguese regions: A spatial shift-share approach. The Annals of Regional Science, 65, 45–65. https://doi.org/10.1007/s00168-019-00973-4
Mihci, S., & Akkoyunlu-Wigley, A. (2009). The impact of the customs union with the European Union on Turkey’s economic growth. Argumenta Oeconomica, 22(1), 163–179.
Moussir, C. E., & Chatri, A. (2020). Structural change and labour productivity growth in Morocco. Structural Change and Economic Dynamics, 53(C), 353–358. https://doi.org/10.1016/j.strueco.2019.06.005
Nasirzadeh, F., Kabir, H. D., Akbari, M., Khosravi, A., Nahavandi, S., & Carmichael, D. G. (2020). ANN-based prediction intervals to forecast labour productivity. Engineering, Construction and Architectural Management, 27(9), 2335–2351. https://doi.org/10.1108/ECAM-08-2019-0406
Nomura, K., & Kimura, F. (2020). APO Productivity Databook 2020. Asian Productivity Organization. https://www.apo-tokyo.org/publications/2020-apo-productivity-databook/
OECD. (2021). OECD compendium of productivity indicators 2021. OECD Publishing, Paris.
OECD. (2022). Health at a glance: Europe 2022: State of health in the EU cycle. OECD Publishing, Paris.
OECD. (2023). OECD compendium of productivity indicators 2023. OECD Publishing, Paris.
Office for National Statistics. (2007). The ONS productivity handbook: a statistical overview and guide. The Office of National Statistics, Basingstoke. Palgrave macmillan.
Oosterhaven, J. & Broersma, L. (2007). Sector structure and cluster economies: A decomposition of regional labour productivity. Regional Studies, 41(5), 639–659. https://doi.org/10.1080/00343400601120320
Otext. (2021). Evaluating forecast accuracy. Retrieved February 2, 2021, from https://otexts.com/fpp2/accuracy.html
Ozcan, K. M, Voyvoda, E., & Yeldan, A. E. (2001). Dynamics of macroeconomic adjustment in a globalized developing economy: Growth, accumulation and distribution, Turkey 1969–1999. Canadian Journal of Development Studies, 22(1), 219–253. https://doi.org/10.1080/02255189.2001.9668808
Padhan, P. C. (2012). Application of ARIMA model for forecasting agricultural productivity in India. Journal of Agriculture and Social Sciences, 8(2), 50–56.
Palazuelos, M. E., & Fernįndez, S. R. (2008). Demand, employment and labour productivity in the European economies. Paper presented at the 16th Conference of the Italian Association for the Study of Comparative Economic Systems, Parma, Spain.
Paul, J. C., Hoque, M. S., & Rahman, M. M. (2013). Selection of best ARIMA model for forecasting average daily share price index of pharmaceutical companies in Bangladesh: A case study on square pharmaceutical ltd. Global Journal of Management and Business Research, 13(C3), 15–25.
Perone, G. (2020). An ARIMA model to forecast the spread and the final size of COVID-2019 epidemic in Italy (Health Econometrics and Data Group Working Paper Series). University of York. https://doi.org/10.1101/2020.04.27.20081539
Pettinger, T. (2019). UK labour productivity. Retrieved December 14, 2021, from https://www.economicshelp.org/blog/5887/economics/uk-labour-productivity/
Primepropertyturkey.com. (2022). Turkish government increases the number of city hospitals. Retrieved August 26, 2021, from https://www.primepropertyturkey.com/news/turkish-government-increases-the-number-of-city-hospitals
Razak, N. A. A., Khamis, A., & Abdullah, M. A. A. (2017). ARIMA and VAR modeling to forecast Malaysian economic growth. Journal of Science and Technology, 9(3), 16–24.
Roson, R. (2019). Sectoral differences in labour productivity growth: estimation and modeling. Research in Applied Economics, 11(1), 1–8. https://doi.org/10.5296/rae.v11i1.14145
Roth, F. (2020). Revisiting intangible capital and labour productivity growth, 2000–2015. Journal of Intellectual Capital, 21(5), 671–690. https://doi.org/10.1108/JIC-05-2019-0119
Sabry, M., Abd-El-Latif, H., & Badra, N. (2007). Comparison between regression and ARIMA models in forecasting traffic volume. Australian Journal of Basic and Applied Sciences, 1(2), 126–136.
Samavati, P. (2013). Forecasting labour productivity growth in Norway for the period 2012–2021 using ARIMA models. Administration & Economics, 3(1), 126–147. https://doi.org/10.2478/wrlae-2013-0048
Schroeder, L. D., Sjoquist, D. L., & Stephan, P. E. (2016). Understanding regression analysis: An introductory guide. Sage Publications. https://doi.org/10.4135/9781506361628
Settsu, T., & Takashima, M. (2020). Labour productivity growth in the long run: Japan, 1600–1909. Australian Economic History Review, 60(1), 5–26. https://doi.org/10.1111/aehr.12188
Sevüktekin, M., & Çınar, M. (2014). Ekonometrik zaman serileri analizi. Dora Yayıncılık, 4. Baskı, Bursa, Türkiye.
Shahnazi, R. (2021). Do information and communications technology spillovers affect labor productivity?. Structural Change and Economic Dynamics, 59, 342–359. https://doi.org/10.1016/j.strueco.2021.09.003
Singh, E. H. (2013). Forecasting tourist inflow in Bhutan using seasonal ARIMA. International Journal of Science and Research, 2(9), 242–245.
Singh, S., Dhir, S., Das, V. M., & Sharma, A. (2020). Bibliometric overview of the technological forecasting and social change journal: Analysis from 1970 to 2018. Technological Forecasting and Social Change, 154, 119963. https://doi.org/10.1016/j.techfore.2020.119963
Türker, M. V., & İnel, M. N. (2013). Is it enough to be entrepreneurial? Enhancing the ‘value added’ created by SMEs in Turkey through innovation. Procedia-Social and Behavioral Sciences, 75, 397–406. https://doi.org/10.1016/j.sbspro.2013.04.044
Van Biesebroeck, J. (2009). Disaggregate productivity comparisons: Sectoral convergence in OECD countries. Journal of Productivity Analysis, 32(2), 63–79. https://doi.org/10.1007/s11123-009-0132-z
Vertakova, Y., Maltseva, I., & Shulgina, Y. (2019). Labour productivity management: factors of growth, the role of social and labour monitoring. Economic Annals-XXI, 180(11–12), 173–182. https://doi.org/10.21003/ea.V180-19
Vis, B. (2012). The comparative advantages of fsQCA and regression analysis for moderately large-N analyses. Sociological Methods & Research, 41(1), 168–198. https://doi.org/10.1177/0049124112442142
Woltjer, G., Van Galen, M., & Logatcheva, K. (2021). Industrial Innovation, labour productivity, sales and employment. International Journal of the Economics of Business, 28(1), 89–113. https://doi.org/10.1080/13571516.2019.1695448
Xu, B., Sendra-García, J., Gao, Y., & Chen, X. (2020). Driving total factor productivity: Capital and labor with tax allocation. Technological Forecasting and Social Change, 150, 119782. https://doi.org/10.1016/j.techfore.2019.119782
Yildirim, Z. (2015). Relationships among labour productivity, real wages and inflation in Turkey. Economic Research-Ekonomska Istraživanja, 28(1), 85–103. https://doi.org/10.1080/1331677X.2015.1022401
Yurtsizoğlu, Z., & Kiliçaslan, Y. (2017). Türkiye hizmet sektöründe yapısal değişim ve verimlilik. Ege Academic Review, 17(2), 215–228.
Zikmund, W. G., Carr, J. C., & Griffin, M. (2013). Business research methods. Cengage Learning, USA.