نوسانات نرخ ارز و رشد اشتغال در کشورهای در حال توسعه: مدارک گرفته شده از ترکیه

Employing a unique panel of 691 private firms that accounted for 26% of total value added in manufacturing in Turkey, the paper explores the impacts of exchange rate volatility on employment growth during the period of 1983–2005. The empirical analysis using a variety of specifications, estimation techniques, and robustness tests suggests that exchange rate volatility has a statistically and economically significant employment growth reducing effect on manufacturing firms. Using point estimates, the results suggest that for an average firm a one standard deviation increase in real exchange rate volatility reduces employment growth in the range of 1.4–2.1 percentage points.

Increasing capital market integration following the collapse of the Bretton Woods system and the accompanying financial liberalization wave of 1980s and early 1990s exposed both developed and developing countries to large swings in exchange rates. As a result, the effects of exchange rate volatility on investment and growth have increasingly become of particular interest for both researchers and policy makers. In a majority of empirical studies, increasing uncertainty and volatility in exchange rates are found to have economically and statistically significant profitability, investment, growth, and, in some, trade reducing effects in both developed and developing countries (Aizenman and Marion, 1999, Bleaney and Greenaway, 2001, Demir, 2009a, Demir, 2009b, Demir, 2009c, Kenen and Rodrik, 1986, Pindyck and Solimano, 1993, Ramey and Ramey, 1995, Serven, 1998, Thursby and Thursby, 1987 and UNCTAD, 2006). In contrast, the theoretical and empirical research on the employment effects of exchange rate volatility has been much limited with an exclusive focus on developed countries. This lack of research on developing country experiences is especially surprising given that they face higher levels of growth (Mobarak, 2005), consumption (Kose, Prasad, & Terrones, 2003), and capital flow (Gabriele, Boratav, & Parikh, 2000) volatility with significantly costlier welfare effects than developed countries (Pallage & Robe, 2003). Therefore, the present research expects to fill an important gap in the literature not only by focusing on the direct employment effects of exchange rate volatility in a major emerging market, Turkey, that faced significant levels of economic instability for the last two decades including two-digit real interest rates and high levels of exchange rate and inflation volatility, but also by employing a unique firm level panel dataset. Accordingly, we utilize a comprehensive dataset including firm level data on the largest 500 private manufacturing firms that accounted for the 26% of total value added in manufacturing in Turkey during 1983–2005. The use of three dimensional data including time, firm and industry characteristics not only allows us to explore the direct effects of macro volatility on employment creation at the firm level but also helps uncover more informative and robust results after controlling for firm-level size, value added, and demand effects. Likewise, the time series dimension of the data permits a detailed analysis of the adjustment process to changes in exchange rate volatility. Regarding the selection of Turkey, the choice was not random. Briefly, Turkey has not only been among the forerunners of trade and financial liberalization among developing countries starting from early 1980s, but also faced the negative effects of financial liberalization first hand through two major financial crises in 1994 and 2000–01. During this period, the standard deviation of real GDP growth has steadily increased from 3.5 in 1980–89 to 5.2 in 1990–99, and to 6.1 in 2000–05. Moreover, the coefficient of variation of annual real short-term capital inflows has increased three-folds from 1982–89 to 1990–2005.1 Private firms, on the other hand, have faced strict credit rationing and been forced to finance their investments mostly from internal sources and short-term borrowing. As of 2005, the share of short-term debt in total debt of top 500 manufacturing firms was around 70% that made them more vulnerable to changes in expectations and macro fundamentals. Furthermore, there was little improvement in the industrial and manufacturing sector performance after liberalization. Accordingly, the share of manufacturing value added in GDP stagnated at around 21% during 1982–89 and 1990–2000 before beginning a steady decline, reaching as low as 16% in 2008, which is the lowest level since 1975. In contrast, the export performance of manufacturing sectors has been a textbook example of the wonders of outward oriented export model, reaching 95% of total exports in 2008 from a bare 27% in 1980. Yet, its employment share in total non-agricultural employment stagnated at round 27–28% throughout the 1980s and 1990s and started to decline during the 2000s reaching 25% in 2007. This contrasting transformation also makes it an interesting case study to explore the effects of exchange rate volatility on manufacturing sector employment performance. The empirical results using a fixed effects (and a dynamic GMM) method and various specifications and robustness tests suggest that exchange rate volatility has a statistically (at less than 1% level) and economically significant employment growth reducing effect on manufacturing firms in Turkey. In terms of economic impact, our point estimates suggest that for an average firm a one standard deviation increase in real exchange rate (RER) volatility reduces employment growth in the range of 1.4–2.1 percentage points that is a considerable magnitude given that the average employment growth has been 1.7% among the sample firms during the period analyzed. The paper is organized as follows: Section 2 provides a brief overview of the literature on the volatility and employment relationship. Section 3 introduces the key hypothesis together with data, methodology and estimation issues. Sections 4 and 5 present the empirical results and robustness tests, and Section 6 concludes the paper.

The findings of this research suggest that exchange rate volatility (and uncertainty) has an economically and statistically significant negative effect on employment growth of manufacturing firms in Turkey. Furthermore, the negative effect appears to be significantly higher for firms with higher export shares in output, and higher levels of indebtedness. Given that sluggish employment growth that has increasingly become disconnected from output growth is a striking feature of the post-liberalization era in many developing countries, the results have significant policy implications. Despite an impressive 6.6% real GDP growth during 2002–07, for example, the employment growth was a disappointing −0.26% in Turkey. On the other hand, the decreasing employment response of growth is not a unique feature of Turkish development rather appears to be a global trend. According to ILO (2007:19) estimates, global employment elasticity (i.e., percentage change in employment for a percentage change in GDP growth) declined from an average of 0.34 during 1991–95 and 0.38 during 1995–99 to 0.30 during 1999–2003. The results also may help explain the increasing use of subcontracting and informalization of labor markets in developing countries. Given that the informal sector accounts for almost half of the employment in Turkey, large firms may be increasingly employing subcontractors for labor-intensive operations and cutting their labor force to reduce their exposure to macroeconomic uncertainty and volatility. Given this picture, one major question concerns the policy tools available to developing countries to reduce the excess volatility in exchange rates. The use of capital controls (using market based or quantitative restrictions), encouraging FDI rather than speculative short-term inflows, countercyclical fiscal and monetary policies, improving domestic financial system, keeping foreign currency denominated public and private debt in check, accumulation of reserves for self insurance, limiting fiscal deficits, having manageable current account imbalances, among others, appear as the top policy recommendations. Some potential venues for future research here would be to explore the interaction of financial sector development, access to domestic and foreign capital markets, and foreign ownership rates with exchange rate volatility. One also needs to keep in mind that in explaining short-term exchange rate fluctuations, fundamentals do perform poorly, in both developed and developing countries.26 A second related question that arises from our findings concerns the type of exchange rate regimes. There is a large literature arguing that the contractionary effects of domestic and external shocks are less pronounced under flexible than fixed exchange rate regimes. Accordingly, the negative effects of such shocks increase with the degree of rigidity of the exchange rate. However, as shown by Calvo and Reinhart (2000) and others, many countries including those that are de facto described as free floaters do indeed intervene in the exchange rate. The fear of floating therefore appears to be a fact of life for policy makers in many developing countries. According to the IMF’s Annual Report on Exchange Arrangements and Exchange Restrictions only nine developing countries (including Turkey) out of 188 IMF members had independently floating exchange rates in 2008. All other free floating countries, numbering 31, were high income countries or EU members. Those supporting managed (at different degrees of rigidity) exchange rates argue that benefits such as economic stability, lower inflation, prevention of large exchange rate misalignments, and faster growth as well as avoiding the possibility of contractionary effects of exchange rate adjustments outweigh the costs of lack of flexibility.27 The balance-sheet effects debate also suggests that the cost of exchange rate fluctuations may be particularly high in countries with large share of foreign currency denominated public and private debt stock. While the question regarding the effects of exchange rate volatility under different currency regimes is beyond the scope of current study, possible extensions for future research includes testing the effect of real exchange rate volatility on employment performance under different exchange rate regimes in developing countries. A third question is related to the welfare costs of exchange rate volatility as opposed to structural labor market rigidities. Given the emphasis by the IMF, WB, and OECD, as well as others, to the labor market rigidities in explaining persistent unemployment rates in many developed and developing countries, it is a legitimate question to ask whether a “credible reduction of unanticipated exchange rate fluctuations” can have “effects very similar to the removal of employment-protection legislation and other direct restrictions of hiring and firing” (Belke & Setzer, 2003, p. 170). That is whether limiting exchange rate uncertainty “can work as a substitute for labor market flexibility” (p. 170)? Therefore, for future research, it would be very interesting to compare the effects of different labor market structures vis-à-vis exchange rate volatility. Last but not the least, another venue for future research is the causes and effects of the stronger employment growth effect of exchange rate volatility compared to the GDP and sales growth. Given the sluggish employment generation amid high economic growth rates in several emerging markets the question is of significant importance for both researchers and policy makers alike.