The Impact of Country Risk Indicators on Total Factor Productivity: Findings on Turkey

Economic growth literature often examines what factors affect total factor productivity (TFP). In recent discussions, the importance of institutions on economic growth and productivity is emphasized. In these discussions, institutions are represented by a number of indicators such as democracy, freedom, law and country risks. Inspired by related discussions, this paper estimates the effect of economic, political, financial and composite risk indicators on TFP for Turkey. The findings reveal that the decline in economic, political and composite risk levels is a positive and significant effect on TFP. On the other hand, there is no statistically significant relationship between financial risk and TFP. The conclusion part presents policy recommendations within the framework of research findings.