Aggregate and Sectoral TFP Growth in Turkey: A Growth Accounting Exercise

This paper undertakes a growth accounting exercise for the Turkish economy. At the aggregate level, we find that total factor productivity growth (TFP) has been quite respectable in the last decade, both in comparison to earlier decades as well as in international comparison. In fact, it is higher growth in aggregate TFP, rather than higher growth in factor inputs, that accounts for higher GDP growth in the 2000s. The paper also derives TFP at the sectoral (agriculture, industry and services) level. We find that in the last decade TFP growth has been relatively high in all three sectors, with the greatest contrast appearing in agriculture. The 2000s was unique in the sense that this was the only decade since the 1970s where TFP growth in agriculture was not only positive but also higher than industry and services. This high TFP growth in agriculture seems to have ended in recent years.