The impact of technology investment on value added: an empirical study on Turkish manufacturing and service sector

Abstract

Thanks to rapid advancements on technology, the new processes of production, marketing and delivering for firms began to be used and this condition enhanced the national and international competition. In order to survive in this new competitive system, firms must follow technology closely. For this reason, the firms that desired to monopolize the competitive power have to invest on Information Communication Technologies (ICT) and Research and Development (R & D). There are widespread opinions in economics literature that technological investments, in other words, the productivity of the investments to ICT and R & D will increase the growth of economy. (See: Griliches, 1991). When it is conceived that R & D investments will bring along patent investments in later, patent investments affect value added and productivity positively (See: Corrado, Hulten and Sichel, 2009; Marrano, Haskel and Wallis, 2009). Thanks to advanced technological infrastructure and the easiness to find data in developed countries, in the studies, the impact of ICT and R & D investments on value added and productivity have been researched in a widespread manner. In Turkey, however, there is no such study which evaluated these two variables at the same time. Yet, there are few studies which investigated ICT and R & D investments separately. In Turkey, the first study which investigated the impact of ICT investments on productivity in a firm level has been made by Kılıçarslan and others (2017) with the industrial and service statistics of Turkish Statistical Institute. The result of analysis, which aimed to find the impact of ICT investments on productivity and total factor productivity in manufacturing industry and sub-sector groups in 2003-2010, demonstrated that ICT investments are more efficient than (traditional) capital investments in this study.