The Sources of the Rise in the Import Content of Production in the Turkish Manufacturing Industry

The import content of production in the Turkish manufacturing industry has been increasing. This study explores the reasons behind this tendency. To this end, we utilize data compiled through a survey and interviews covering 145 large-scale manufacturing firms. Our analyses reveal two principal sources behind the rise in the import content of production: (1) the change in the structure of production in favor of sectors having high import content and (2) the increase in the use of imported inputs for the majority of firms covered in the study. Regarding the second factor, it is found that insufficient domestic input supply in certain intermediate and investment goods, need to use high quality materials and machinery embodying new technology, lower cost of imported inputs, vertical integration of production processes of multinational and/or foreign-owned companies, supplier credits and credits extended by foreign financial institutions have induced firms to use more imported inputs.