Structural determinants of productivity: sector-level evidence from Turkiye

Purpose- The purpose of this study is to investigate how market concentration, capital intensity, labour share, and macroeconomic conditions shape sectoral productivity in Türkiye. Although substantial research highlights the link between market structure and productivity, empirical evidence from emerging economies, particularly at the sector level, remains limited. Türkiye represents an important case due to its structural heterogeneity, frequent macroeconomic fluctuations, and the coexistence of highly concentrated and highly competitive industries. This study aims to fill this gap by providing sector-level evidence based on the Annual Industry and Service Statistics (AISS) for the period 2009–2022. Methodology- The analysis employs fixed-effects panel regressions. Labour productivity (lnprod) is modelled as a function of market concentration (HHI), capital–equipment ratio (lncer), employment scale (lnemployment), and the adjusted labour share (adj_ls). Additional models include exchange rate, interest rate, year fixed effects, and a linear time trend. Robust standard errors are clustered at the industry level. Findings- The results consistently indicate that increases in market concentration are associated with higher sectoral productivity across all model specifications. Although the magnitude of the HHI coefficient declines when macroeconomic controls or time effects are added, the positive and statistically significant relationship remains highly robust. Capital intensity is another strong and stable predictor of productivity, indicating that sectors employing more capital-intensive production technologies tend to achieve higher efficiency levels. In contrast, the effect of employment size becomes statistically insignificant when macroeconomic shocks are controlled for, suggesting that sector size alone does not drive productivity. The adjusted labour share has a persistent adverse impact on productivity, consistent with the idea that higher-productivity sectors allocate a smaller share of value added to labour. Finally, exchange rate and interest rate dynamics affect productivity in expected directions. Conclusion- The study concludes that productivity differences across sectors in Türkiye are shaped by both structural characteristics, particularly concentration and capital intensity, and macroeconomic conditions. The persistence of the concentration–productivity relationship suggests that market structure plays a significant role in sectoral performance. Keywords: Market concentration, productivity, capital intensity, labour share, panel data analysis JEL Codes: L11, O47, C23