Facilitation du Transport en Turquie et Pologne: Etude Comparative

FEM35-05 | Février 2014


« Facilitation of Transportation in Turkey and Poland: a Comparative Study »


Jan Michalek, University of Warsaw, Poland and Subidey Togan, Bilkent University, Turkey


Andrzej Cieslik, University of Warsaw, Poland; Nergiz Dincer, TED University, Turkey Jan Hagemejer, University of Warsaw, Poland; Mahdi Ghodsi, University of Warsaw, Poland; Aneta Mach, University of Warsaw, Poland; Armando Rungi, University of Warsaw, Poland June

Note :

Ce rapport a été réalisé avec le soutien financier de l’Union Européenne au travers du Femise. Le contenu du rapport relève de la seule responsabilité des auteurs et ne peut en aucun cas être considéré comme reflétant l’opinion de l’Union Européenne.

Résumé :

(Résumé est disponible en Anglais seulement)

A close relationship exists between trade costs and exports as revealed by Samuelson
(1964) and Dornbush et al. (1977) within the framework of a version of the Ricardian
model of international trade. On the other hand, in the Melitz (2003) model, that
combines economies of scale at the firm level with productivity differences between
firms, and its numerous extensions, trade costs do play important roles. In all models of
‘new new trade theory’ trade costs affect the aggregate volume of international trade.
Since with increased liberalization a major component of trade costs turned out to be the
transport costs as shown by Hummels (1998) and Anderson and Wincoop (2004), the
transport costs are one of the major determinants of a country’s competitiveness, and thus
of its ability to participate in the world economy. Empirical models of Bougheas et al.
(1999) and Limao and Venables (2001) confirm this conclusion.

Important determinants of transport costs are distance, geography, infrastructure,
administrative barriers, and state of competition in the transport sector. In principle
governments can try to decrease the transport costs by improving poor transportation
infrastructure conditions, reducing administrative costs, and decreasing the inefficiencies
in transport services by liberalizing the transport sector and thus increasing competition
in the sector. Hence, the liberalization of transportation services sector is of crucial
importance for decreasing the trade costs of goods produced by various industries within
the manufacturing sector.

In this study we concentrate on the effects of changes in infrastructure and liberalization
in the transport sectors on the transport costs by focusing on the four sub-sectors of the
transport sector, namely road transportation, rail transportation, maritime transportation,
and air transportation. We focus on two economies – Poland and Turkey. Whereas
Poland is a New Member State of the European Union (EU), Turkey is a candidate
country of the EU.

The study consists of six chapters. In Chapter 1 we analyze besides the quality of
transport infrastructure the market structure in the four transportation sub-sectors in
Poland and Turkey. We note that trade liberalization in road transportation, rail
transportation, maritime transportation, and air transportation sectors requires the
harmonization of rules and regulations in the sectors with those of the major trading
partner, namely the EU. In addition, the liberalization requires the removal of any legal or
administrative provisions restricting market access and commercial presence. As a result
we concentrate in Chapters 2-5 on the analysis of regulatory frameworks in road, rail,
maritime and air transportation sectors as well as on the analysis of restrictions to market
access and commercial presence. Each chapter after studying the basic characteristics of
the related services considers the international regulatory regime, thereafter the rules and
regulations in the EU, and lastly those in Turkey and Poland. The chapters are intended to
show how far the four sub-sectors of the transportation sector in Poland and Turkey are
from trade liberalization with the EU. Finally, Chapter 6 studies the performance and characteristics of firms in transport sub-sectors in Poland and Turkey using firm level


In the past Poland, like many non-market economies in Central and Eastern Europe, had
relied on public transportation provided by large and public enterprises. The situation
changed dramatically in early 1990s, when a market for imported passenger cars was
created. The large state-owned enterprises were split and transformed into public or
private enterprises. The rail transport’s share of the modal split has decreased sharply. In
the freight transport market, rail’s share dropped from over 50 percent to just under 27
percent between 1995 and 2005. At the same time, the share of road transport increased
dramatically, compensating for the drop in railway transportation.
The increased demand for road transportation services and the surge of private traffic
revealed a considerable bottleneck in the previous infrastructure. Similarly, a larger
demand for air passenger transportation was constrained by both a limited number of
airports and their insufficient capacity. On the other hand, a drop of demand for railway
passenger and cargo services and underinvestment in maintenance and modernization of
the existing network reduced the competitiveness of the railway transport even further.
Not different was the case of the maritime sector, where two great weaknesses were
remoteness from the main oceanic traffic routes and the underdeveloped transport
connections with the main domestic business centers. Only recently some major
investments in motorways, airports and high-speed railway lines have been undertaken as
supported by EU structural funds. Hence, quality improvement in Polish transport
infrastructure can be expected in the following decades.

Turkey, in contrast to Poland, has been a market economy throughout the whole post-war
period and has been associated with the EU since the 1960s. The transport system in
Turkey relies essentially on road transportation, similar to Poland, while railway network
remains underdeveloped. Unlike in Poland, maritime transport plays an important role in
development of international trade in Turkey due to its geographic location between
Europe and Asia and the length of the coastline. Therefore, it is not surprising that over
50 percent of the quantity and 75 percent of the value of goods exported by Turkey are
transported over water. In air transportation after the withdrawal of government from
commercial activities starting in 1986, Turkey experienced a tremendous development in
civil aviation sector. Turkey’s transport sector has been growing not only in terms of its
size but also in terms of quality of the network. According to the quality indexes for
transport infrastructure such as those of World Competitiveness Report and World
Bank’s Logistics Performance Index, Turkey ranks above Poland.
Despite recent improvements, Turkey’s infrastructure size and quality still lag behind
other OECD and EU countries. There is need for improvement in the infrastructure
especially in railroads and ports. It is emphasized that by improving the transport
infrastructure Turkey could help to reduce regional disparities. Improved transport size
and quality will not only support international trade but also facilitate increased productivity and competitiveness of the Turkish products. The Turkish Government
recognizing the needs in the sector has set ambitious targets for 2023, the 100th
anniversary of the establishment of the Republic of Turkey, in the new transport strategy
document.1 The document advocates a modal shift between roads and railways. In the
new strategy, the Government’s target is to increase the share of railways from 4.76
percent to 15 percent in freight transportation and from 2.22 percent to 10 percent in
passenger transportation by 2023. These targets require a reduction in the share of road
transport from 80.66 percent to 60 percent in freight and from 89.59 percent to 72 percent
in passenger transportation. The Government announced plans to expand highways by
three times, from 2,250 km to 7,500 km, and almost double the length of divided roads by
the end of 2023. Similarly, the plan more than doubles the railway infrastructure capacity
by 2023.

Chapter 2 concentrating on road freight transportation reveals that the liberalization of
road freight transport services is a daunting task as shown by the experience of the EU.
The liberalization of road freight transport services requires harmonization of rules and
regulations in the road transport sector among the Member and Candidate Countries, and
strict implementation of these rules and regulations, which concern market access and
competition, pricing and fiscal conditions, social conditions, technical conditions, and
road safety. In addition the EU states that the infrastructure should be accessible to all
current and potential service providers on a non-discriminatory basis, and road
infrastructure as a whole should be sufficient. Specific prescriptions for modernization
and efficiency of border crossing points for customs procedures are provided.
The EU has taken major steps in strictly implementing the road freight acquis, but
problems remain in the field of tax harmonization among Member Countries, also due to
different interpretations of the rules on vehicle standards and drivers’ working conditions.
Although the EU sets minimum and maximum taxation thresholds, taxation of fuels and
charges for infrastructure vary considerably among Member Countries. Similar
considerations apply to drivers’ working conditions. There may also be lack of
confidence in the ability or the will of the Member States to enforce the harmonized rules
and regulations. To avoid problems in this area there is a need for harmonization of
inspection practices among the Member Countries. One case where the EU has failed to
create a single road freight transportation market is the road cabotage. Although cabotage
was liberalized in 1993 with the adoption of Council Regulation 3118/93, it was not
possible to overcome the protectionist leanings within the Community. Several countries
tried to restrict cabotage by interpreting temporary basis on their liking. At the end the
Commission adopted the Regulation 1072/2009. Article 8 of that Regulation states that
every haulier is entitled to perform up to three cabotage operations within a seven day
period starting the day after the unloading of the international transport.
In the case of Poland we note that the liberalization of Polish freight transport sector is
driven mainly by the changes in the EU regulations that are subsequently harmonized into the Polish law. The recent changes in the EU regulations concerning market access,
cabotage and community licences are currently being introduced into national legal
framework, in particular the Law of Transport. While the national legislation is currently
being updated, the EU law applies and it carried out through decisions of the minister
relevant to transport.
On the other hand, Turkey has started the process of adopting and implementing the
legislative, regulatory and institutional framework of the EU road freight transport sector.
It has adopted large number of EU rules and regulations in road freight transport sector
concerning market access and competition, pricing and fiscal conditions, social
conditions, technical conditions, and road safety. The country by changing the regulatory
regime aims to increase competition in the sector, and also increase access to the EU road
freight transportation market. But as in the case of Poland, major problems are faced in
the implementation of these rules as well as with the improvement of infrastructure in

In chapter 3 we consider the rail transport sector. In the EU liberalization efforts started
during the 1990s. The main objectives of the rail reforms introduced in Europe were: (i)
to improve competition; (ii) to create more and better integrated international freight rail
services; (iii) to improve the efficient use of infrastructure capacity; (iv) to facilitate the
creation of a single European rail space; and (v) to reduce the declining modal share of
railways. The first reform package started with directives issued in 1991, 1995 and 1996.
The Second Railway Package adopted in 2004 provided a framework for further
liberalization of the freight market and harmonization of the regulation of safety and
technical standards across the EU. The third package introduced in 2007 granted the right
of access to the infrastructure in all Member States, introduced a European driver license
allowing train drivers to circulate on the entire European network and defined passengers’
rights and obligations that ensure basic rights for passengers in such areas as insurance,
ticketing, and passengers with reduced mobility.
Although over the last two decades the EU managed to build a good basis for a genuine
single market for railway transportation, the Commission of European Communities
(2010) points out that a single European railway area based on an integrated
infrastructure network still is not established. The Regulation No 913/2010 on European
network for competitive freight is aiming at the development of European rail network
for competitive freight by establishing rules for the creation and organization of
international rail corridors for competitive rail freight.
During the last two decades Poland has made significant progress in opening-up its
railway market to domestic and foreign competition. This progress can be illustrated by a
relatively high ranking of Poland among EU states, as expressed using rail liberalization
indices reported by IBM Business Consulting Services (2011). Progress was made in
terms of legal liberalization, measured by the LEX index and in real opening of the
market (ACCESS index). The increased competition is especially pronounced in freight transports. By now several foreign Railway Undertaking started their operations and
gained important shares of Poland’s market. In the case of passenger transport the
increased competition is mainly among domestic firms.
Despite the progress in the access liberalization the share of railways in Poland is
gradually decreasing in the intermodal split. The major challenge is the necessity to
modernize Polish railway infrastructure. Until 2008 the level of infrastructure
investments was very low by standards of old EU states. The situation is improving since
2009, when substantial amounts of public investments with the support from the
European structural funds have been spent on railway infrastructure and rolling stock.
Another major challenge is to ensure the interoperability of the Polish network with the
Trans-European network of high speed lines, as well as the interoperability of the Trans-
European conventional railway system.
The rail industry in Turkey is dominated by Turkish National Railways (TCDD) which is
a state owned, vertically integrated company that not only deals with provision of
infrastructure, but also with the supply of both freight and passenger services. It is
responsible for operating and renewing railways, ports, and piers; guiding and
coordinating affiliated companies; and carrying out complementary activities regarding
rail transport such as land transport that includes ferry operations. In 2005, a project was
launched by the TCDD to open the railway market, to establish the legislative framework
in accordance with the EU acquis and to re-structure the TCDD. In the new
organizational structure for the rail sector, TCDD would become the infrastructure
manager, continuing to operate as a public enterprise. The rolling stock, tracks, track
components, and signaling will be under the supervision of TCDD. In addition, a new
joint stock company, Turkish Railway Transportation Corporation, will be created as a
rail undertaking, providing passenger and freight rail services as a subsidiary of TCDD.
The future plans for the Turkish railway sector include among others the strengthening of
the administrative capacity in regard to safety and interoperability, analyzing current
railway safety rules for gap analysis, examining Technical Specifications for
Interoperability for preparing National Safety Rules, training the staff about
interoperability, establishing a safety unit at TCDD, and preparing a Safety Management
System. The existing Railway safety rules are to be rearranged.

In chapter 4 we analyze the maritime transport sector. Since maritime transport is
inherently international in character, and vessels on most voyages must operate under the
regulatory requirements of many jurisdictions, there is an inherent need for
harmonization across countries. Countries need to harmonize their own rules and
regulations to international rules and regulations, which are classified as (i) regulations
related to commercial operations and practices and (ii) regulations related to safety and
environmental regulations. Compared to international rules and regulations the EU rules
and regulations in the maritime sector are generally much stricter.
The process of adjusting Polish regulations, in terms of maritime transport, to EU’s
legislation required many novelizations. In order to provide the legal and institutional
conditions for the application of the principle of freedom of establishment Poland has
introduced the novelized Act of Economic Activity, abolishing the business license
requirement for foreign entities willing to conduct business in maritime transport.
The competitive position of European merchant fleet is affected by state subsidies. The
guidelines on State aid to maritime transport were updated in 2004 (2004/C 13/03), and
include a whole list of possible privileges which can be implemented in order to
encourage the ship owners to return to European flags. They include inter alia: (i)
replacement of income tax by flat rate tonnage taxation system (which depends on the
total volume of transport instead of the financial outcome of the ship owner), (ii)
reduction or elimination of social security contributions for seafarers (iii) reduction or
elimination of other social benefit payments incurred by the shipowners and (iv)
reimbursement of expenditures incurred on upgrading skills of seamen.
The accession to the EU forced Poland to follow European standards on maritime safety
and security. Poland became a member of the European Maritime Safety Agency
(EMSA). Ships flying the Member Country’s flags are subject to frequent inspections,
though the frequency depends on the assigned risk profile. Poland has signed all 19 of
ILO conventions concerning seafarers, 2 concerning fishermen and 2 concerning
dockworkers. On March 18, 2009 Poland adopted the Polish Maritime Policy in 2020.
The document establishes the basis for Polish maritime policy, to implemented in
accordance with the guidelines presented in “An Integrated Maritime Policy for the
European Union”.

On the other hand, in the case of Turkey we note that Turkey does not associate itself
with the OECD Common Shipping Principles and has a reservation on Note 1 of the
OECD Code of Liberalization of Current Invisible Operations. Turkey has signed the UN
Liner Code but has not ratified it yet. It has no laws and regulations governing the
operation of liner conferences. Turkey has signed some of the international maritime
conventions. Regarding regulations on safety and the environment, we note that Turkey is
one of the 38 states that have not signed the “The United Nations Convention on the Law
of the Sea” (UNCLOS). The country signed only 12 of the ILO conventions concerning
seafarers and dockworkers. Turkey is a signatory to many of the IMO rules and
regulations. According to the European Commission (2011), ship sourced emissions,
maritime emergency response, reception of waste from ships, and handling of dangerous
goods in Turkey are areas that call for closer scrutiny.
Turkish regulations until 1983 required that all imports of public enterprises and public
entities be transported by Turkish-flag vessels. This restrictive policy was liberalised in
1983 by Decree 152, which stipulates that all imports for the account of public entities
are to be carried on board Turkish-flag vessels if the freight rate is not more than 10
percent higher than that quoted by foreign operators. On the other hand, according to the
Cabotage Act, cabotage is reserved to national flag carriers, and maritime transport among Turkish ports is assigned to Turkish ships only. Furthermore, towage, pilotage,
and other services related to ports are executed only by Turkish ships.
Turkey is in the process of adopting and implementing the legislative, regulatory and
institutional framework of the EU maritime freight transport sector. The country by
changing the regulatory regime aims in the long run to increase competition in the sector,
and gain market access to the EU market. In December 2003, Turkey adopted an
ambitious five-year Maritime Transport Action Plan for the enhancement of maritime
safety. This action plan sets out a road map for legislative alignment with the acquis on
maritime safety, measures aimed at strengthening administrative structures (in the area of
flag State and port State control) and training and equipment needs.

In chapter 5 we consider the air transport sector. Economic liberalization of air transport
services means not only liberalization of passengers and freight transport by aircraft, but
also liberalization of ancillary services such as air traffic control services, airport
services, aircraft repair, computer reservation systems (CRS), ground handling, and
aircraft repair and maintenance services subject to the condition that minimal safety,
security and environmental consideration are secured. Since air transport is inherently
international in character, and carriers must operate under the regulatory requirements of
many jurisdictions, there is need for harmonization of rules and regulations across

In the EU liberalization of air transport services started in 1987, and with the adoption of
three EU liberalization packages the air services market in the EU has been completely
reshaped to provide tighter competition, more efficient use of infrastructure and more
benefits to consumers. With the third liberalization package regulations regarding
licenses to air carriers, access for air carriers to intra-Community air routes, and fares and
rates for air services was supplemented by the Regulation No 1008/2008 on common
rules for the operation of air services. The 2008 regulations liberalized and standardized
terms of the granting of licenses to carry out air transportation services and strengthened
the supervision of the national authorities, introduced a complete freedom to set fares by
carriers and regulations on the code-sharing operations. Hence, the new regulation
increased the freedom of operation, while tightening the rules on finance and tariff

The accession of Poland to the EU and the liberalization of the market legislation
changed completely the legal environment in Poland. The major change was the creation
of the national Civil Aviation Office (CAO) being the aviation supervision authority and
responsible for the implementation of the EU regulations. The CAO is responsible inter
alia for registers of aircraft, aerodromes, aviation ground facilities, flight safety,
examination of safety levels in civil aviation, and general application of civil aviation
regulations. Poland has implemented the core elements of the Single European Sky
legislation. At the time of Poland’s accession to the EU aviation market was open to
competition between airlines and airports.
The Polish Aviation Law, as amended in 2006, defines public airport for commercial
flights. The management of the airport for public use requires a license. Detailed
regulations describe precisely the conditions for setting up and operating public airports.
Before the accession to EU only two airport management companies received permits
and the end of 2010 there were already ten entities that have permission to manage
public use airports.

In Poland the provision of air services is conditioned upon obtaining a license to operate
in air flights. The Aviation Law is implementing legislation and Council Regulation
(EEC) No. 2407/92 on licensing of air carriers. The access rules for carriers to routes
within the EU, in turn, were defined in Council Regulation (EEC) No 2408/92. In the
years 2004 – 2011 there have been major changes in the number of entities with permits
and licenses to perform aviation activities. Since the Polish accession to the EU, the
number of domestic entities that have a license to operate in the field of air transport has
significantly increased. Also, the number of foreign (EC) air carriers operating in Poland
increased dramatically. In consequence the Polish market became attractive not only for
the “traditional » European carriers, but also for the low-cost carriers. In 2002-2003, in
Poland, there were 28-30 airlines offering their services. In subsequent years, some of the
airlines left the Polish market, but there are also new firms entering the market. In the
pre-crisis peak year – 2008, 46 aircraft carriers operated in the Polish market. The rapid
increase in passenger traffic has been observed after Poland’s accession to the EU. In
2011, the Polish airports handled a total of 21.7 million commercial traffic passengers, an
increase of 6.1 percent compared to the previous year.
In Turkey private air carriers could be established with the enactment of Law No. 2920
on Civil Aviation in 1983. Air carriers for domestic or international ‘scheduled’ flights
are authorized to provide services if they are registered in Turkey and operate a minimum
of five registered aircraft with at least 100 seats. However, aircrafts can be leased and
there is no requirement of ownership. In 2001 as the Turkish aviation sector was
undergoing liberalization an amendment to the Turkish Civil Aviation Code was adopted
allowing air carriers to set airfares without the approval of the Ministry of Transportation.
When setting the tariffs, airline operators should obtain the approval of the Ministry in
advance, and they are under the obligation to advertise new tariffs at least 3 days before
they are implemented. Thus, the government since 2001 no longer intervenes in the
pricing of non-scheduled or air taxi services. In 2004 some Turkish air carriers started
scheduled domestic flights including to and from Istanbul, contributing to the end of the
State-owned operator’s de facto monopoly in the domestic scheduled flights.
Turkey is a member of the International Civil Aviation Organization (ICAO), European
Civil Aviation Conference (ECAC), European Organization for the Safety of Air
Navigation (EUROCONTROL), Joint Aviation Authority (JAA), and it is party to a large
number of international conventions such as the Chicago Convention. Safety regulations
for civil aviation has its legal basis through (i) the organization and functions of the
Ministry of Transportation, Maritime Affairs and Communications (MTMAC), (ii)
Turkish Civil Aviation Law, (iii) Law on the Organization and the Duties of the General Directorate of Civil Aviation (DGCA), (iv) the Chicago Convention, and (v) the

Air carriers operating international scheduled services to Turkey are authorized on the
basis of reciprocity within the framework of bilateral agreements. Charter services are
authorized on the basis of reciprocity under the rules of the European Civil Aviation
Commission (ECAC), of which Turkey is a member. Cargo transport is under the
provisions of Law No. 2920 and relevant articles of the Regulation on Commercial Air
Transport Operations, as well as the applicable provisions of bilateral air transport
agreements signed by Turkey. Turkey has signed bilateral air transport agreements with
122 partners. Under these agreements, Turkish carriers are operating scheduled services
to 175 cities abroad. Some of these agreements restrict market access to the signatory
states’ respective national carriers. A legal duopoly has therefore been created for the
specific international routes covered by these Agreements. These restrictions benefit the
Turkish Airlines (THY) to the detriment of all the other domestic carriers who are
prevented from flying to the international destinations covered by these Agreements.
Although major steps have been taken in Turkey to liberalize the aviation sector since
2001, European Commission’s 2011 Regular Report on “Turkey’s Progress towards
Accession” maintains that the process is not complete. According to the report an EUTurkey
horizontal aviation agreement is at a final stage. Since Turkey is willing to be part
of the single European sky, a pre-accession strategy for the aviation sector has been
developed. The strategy covers a set of priority actions on human resources, environment,
market regulation and aviation safety that needs to taken by Turkey. Regarding air traffic
management the report notes that there are no developments concerning the exchange of
flight data and requirements for the application of a flight message transfer protocol used
for the purpose of notification, coordination and transfer of flights between air traffic
control units. Moreover, air traffic management according to the report is suffering from
a lack of regional cooperation. In addition, to align with the acquis in the area of air
safety, Turkey is expected to accept European Aviation Safety Agency (EASA) as the
competent body to carry out standardization inspections in the field of air traffic
management and air navigation services. Finally, the Report notes that further efforts are
needed in order to improve implementation on slot allocation, particularly as regards the
independence of the slot coordinator.

The final chapter of the study, namely Chapter 6, is devoted firm-level data analyses. In
the first stage we compare Polish firms active in transport industries to their counterparts
in other EU countries, and assess some most notable differences between the transport
industry and the rest of the economy. The results show that Polish firms in transportation
sector are usually larger than those in other EU countries, especially in the railway and
road transport sectors. An exception is air transportation where Polish firms are visibly
smaller. In terms of labor productivity, Polish firms are roughly six times less efficient in
comparison to firms from the old EU member states, whereas their efficacy is about three times higher in relation to those operating in other Central and Eastern European
The analysis of market characteristics of EU firms reveals that price cost margins (PCMs)
are – despite liberalization efforts – fairly stable in all transport sectors over the analyzed
ten years period. In the case of Poland, while competitive pressure in rail services is
rather low, inefficiencies in the major rail service providers result in poor financial
conditions of single enterprises. We also observe a strongly decreasing minimum
efficient scale (MES) along the whole period for EU airline firms. A number of low-cost
firms have benefited from lower technological barriers to entry and the competitive
pressure has risen considerably. On the other hand, the highest minimum efficient scale
was observed for railway companies, for which the fixed investment in infrastructure is
still very important and it can impede the entry of smaller firms.
The subsequent analysis of export performance, using ‘Business Environment and
Enterprise Performance Survey’ (BEEPS) data base elaborated by European Bank for
Reconstruction and Development (EBRD), demonstrated a number of similarities
between manufacturing and transportation sectors. Labour productivity has a relatively
robust, positive impact on probability of exporting, both in the case of manufacturing and
transportation services. In both cases quality certificates and introduction of new products
are among the factors that tend to increase to probability to export. Quality certificates
are meant to reduce information asymmetry and may facilitate trade, while introduction
of new products may be perceived as ways to gain new markets and increase market
share in existing markets. Contacts with foreign markets through imports do improve the
probability to export in both sectors. However, a number of important differences
between the manufacturing and transportation sectors can be identified. In particular,
larger manufacturing enterprises have a higher probability of exporting, while the result
does not hold for transport firms. This may stem from the fact that some of the large
transport companies in analyzed countries are not necessarily export oriented – as their
natural transport activity focus on the domestic market, which is the case in e.g. public
Human capital seems to be important for export activity of manufacturing firms; however
this result seems not to apply to transport firms. Firms in the manufacturing sector that
rely on internal funding tend to export less frequently but this result does not hold for the
transport firms. As far as institutional environment is concerned, higher crime rate
(robbery) is among factors that can be detrimental to exporting activity . Its negative
impact is not completely robust across analyzed samples, although it seems to have a
relatively significant negative impact in the case of Poland. On the other hand, while the
perceived corruption does not seem to negatively affect the exporting activity, it seems
that exporters in the transport sector tend to perceive more problems with corruption than
non-exporters. Similarly, while difficulties in obtaining permits do not generally affect
the probability of exporting, they do have a negative impact on exporting in the case of
the transport industry. This finding does not apply to Poland, where difficulties with
permits do not have a statistically significant impact on export activities.
In the last section of the chapter we investigate first the firm characteristics of Turkish
enterprises in different transportation sub-sectors, and turn thereafter to the analysis of
the determinants of export activity of Turkish transportation firms. The analysis revealed
that transportation service exports and imports are rather rare activities in transportation
sector. Regarding services trade we note that transportation sub-sectors are engaged more
in exporting and rarely in importing. Although the percentage of firms that engage in
trade of transportation services is rather low, those firms account for a large share of
economic activity. On the other hand, the results of the determinants of export activity
suggest that labor productivity is positively related to the probability of exporting.
Similarly as in other empirical studies, the firm size is positively related to the probability
of exporting. Moreover, the coefficient of large firm is greater than the coefficient of the
variable for medium firms, indicating vertical integration in transport service exports.
The estimated parameter on the capital-labor ratio is positive indicating that exporting
firms in Turkey are usually capital intensive. Furthermore, the empirical results suggest
that firms with foreign participation involve in export activity more than the domestic
To study the impact of competition on labor productivity we model labor productivity as
a function of capital intensity, exports, size of the firm, and competition variables such as
price-cost margins and mark-ups. Empirical results suggest that firms that are more
capital intensive have higher productivity. The coefficient of the size of the firm is
positive and significant indicating that larger firms are more productive. Furthermore,
firms that are involved in services trade are more productive, and firms that have foreign
ownership are also more productive. But the coefficient of price-cost margin and mark-up
variables turn out to be positive although the signs of these variables are expected to be
negative. This result may be due to the fact that liberalization within the domestic market
has been achieved in Turkish transportation sector, especially in road and air subsectors
during the 1980’s and 1990s. The empirical data used in the study do not cover this
period. On the other hand, external liberalization of the transportation sectors as
emphasized in Chapters 2-5 of our study is still in its initial stages. Since external
liberalization of transport services requires the adoption and implementation of the
legislative, regulatory and institutional framework of the main trading partner, namely
those of the EU, external liberalization will be achieved only over time. Hence, the data
do also not indicate the results of external liberalization. Finally, we note that the share
of firms engaged in foreign trade is very small.

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