A close relationship exists between trade costs and exports as revealed by Samuelson
\n(1964) and Dornbush et al. (1977) within the framework of a version of the Ricardian
\nmodel of international trade. On the other hand, in the Melitz (2003) model, that
\ncombines economies of scale at the firm level with productivity differences between
\nfirms, and its numerous extensions, trade costs do play important roles. In all models of
\n\u2018new new trade theory\u2019 trade costs affect the aggregate volume of international trade.
\nSince with increased liberalization a major component of trade costs turned out to be the
\ntransport costs as shown by Hummels (1998) and Anderson and Wincoop (2004), the
\ntransport costs are one of the major determinants of a country\u2019s competitiveness, and thus
\nof its ability to participate in the world economy. Empirical models of Bougheas et al.
\n(1999) and Limao and Venables (2001) confirm this conclusion.<\/p>\n
Important determinants of transport costs are distance, geography, infrastructure,
\nadministrative barriers, and state of competition in the transport sector. In principle
\ngovernments can try to decrease the transport costs by improving poor transportation
\ninfrastructure conditions, reducing administrative costs, and decreasing the inefficiencies
\nin transport services by liberalizing the transport sector and thus increasing competition
\nin the sector. Hence, the liberalization of transportation services sector is of crucial
\nimportance for decreasing the trade costs of goods produced by various industries within
\nthe manufacturing sector.<\/p>\n
In this study we concentrate on the effects of changes in infrastructure and liberalization
\nin the transport sectors on the transport costs by focusing on the four sub-sectors of the
\ntransport sector, namely road transportation, rail transportation, maritime transportation,
\nand air transportation. We focus on two economies \u2013 Poland and Turkey. Whereas
\nPoland is a New Member State of the European Union (EU), Turkey is a candidate
\ncountry of the EU.<\/p>\n
The study consists of six chapters. In Chapter 1 we analyze besides the quality of
\ntransport infrastructure the market structure in the four transportation sub-sectors in
\nPoland and Turkey. We note that trade liberalization in road transportation, rail
\ntransportation, maritime transportation, and air transportation sectors requires the
\nharmonization of rules and regulations in the sectors with those of the major trading
\npartner, namely the EU. In addition, the liberalization requires the removal of any legal or
\nadministrative provisions restricting market access and commercial presence. As a result
\nwe concentrate in Chapters 2-5 on the analysis of regulatory frameworks in road, rail,
\nmaritime and air transportation sectors as well as on the analysis of restrictions to market
\naccess and commercial presence. Each chapter after studying the basic characteristics of
\nthe related services considers the international regulatory regime, thereafter the rules and
\nregulations in the EU, and lastly those in Turkey and Poland. The chapters are intended to
\nshow how far the four sub-sectors of the transportation sector in Poland and Turkey are
\nfrom 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
\ndata.<\/p>\n
I.\u00a0<\/strong><\/p>\n In the past Poland, like many non-market economies in Central and Eastern Europe, had Turkey, in contrast to Poland, has been a market economy throughout the whole post-war II.<\/strong> III<\/strong>. IV<\/strong>. On the other hand, in the case of Turkey we note that Turkey does not associate itself V.<\/strong> In the EU liberalization of air transport services started in 1987, and with the adoption of The accession of Poland to the EU and the liberalization of the market legislation In Poland the provision of air services is conditioned upon obtaining a license to operate Air carriers operating international scheduled services to Turkey are authorized on the VI<\/strong>. REFERENCES<\/strong> A close relationship exists between trade costs and exports as […]<\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0},"categories":[35,230,11],"tags":[336,333,334,335],"acf":[],"_links":{"self":[{"href":"https:\/\/www.femise.org\/en\/wp-json\/wp\/v2\/posts\/11013"}],"collection":[{"href":"https:\/\/www.femise.org\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.femise.org\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.femise.org\/en\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/www.femise.org\/en\/wp-json\/wp\/v2\/comments?post=11013"}],"version-history":[{"count":2,"href":"https:\/\/www.femise.org\/en\/wp-json\/wp\/v2\/posts\/11013\/revisions"}],"predecessor-version":[{"id":11016,"href":"https:\/\/www.femise.org\/en\/wp-json\/wp\/v2\/posts\/11013\/revisions\/11016"}],"wp:attachment":[{"href":"https:\/\/www.femise.org\/en\/wp-json\/wp\/v2\/media?parent=11013"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.femise.org\/en\/wp-json\/wp\/v2\/categories?post=11013"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.femise.org\/en\/wp-json\/wp\/v2\/tags?post=11013"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nrelied on public transportation provided by large and public enterprises. The situation
\nchanged dramatically in early 1990s, when a market for imported passenger cars was
\ncreated. The large state-owned enterprises were split and transformed into public or
\nprivate enterprises. The rail transport\u2019s share of the modal split has decreased sharply. In
\nthe freight transport market, rail\u2019s share dropped from over 50 percent to just under 27
\npercent between 1995 and 2005. At the same time, the share of road transport increased
\ndramatically, compensating for the drop in railway transportation.
\nThe increased demand for road transportation services and the surge of private traffic
\nrevealed a considerable bottleneck in the previous infrastructure. Similarly, a larger
\ndemand for air passenger transportation was constrained by both a limited number of
\nairports and their insufficient capacity. On the other hand, a drop of demand for railway
\npassenger and cargo services and underinvestment in maintenance and modernization of
\nthe existing network reduced the competitiveness of the railway transport even further.
\nNot different was the case of the maritime sector, where two great weaknesses were
\nremoteness from the main oceanic traffic routes and the underdeveloped transport
\nconnections with the main domestic business centers. Only recently some major
\ninvestments in motorways, airports and high-speed railway lines have been undertaken as
\nsupported by EU structural funds. Hence, quality improvement in Polish transport
\ninfrastructure can be expected in the following decades.<\/p>\n
\nperiod and has been associated with the EU since the 1960s. The transport system in
\nTurkey relies essentially on road transportation, similar to Poland, while railway network
\nremains underdeveloped. Unlike in Poland, maritime transport plays an important role in
\ndevelopment of international trade in Turkey due to its geographic location between
\nEurope and Asia and the length of the coastline. Therefore, it is not surprising that over
\n50 percent of the quantity and 75 percent of the value of goods exported by Turkey are
\ntransported over water. In air transportation after the withdrawal of government from
\ncommercial activities starting in 1986, Turkey experienced a tremendous development in
\ncivil aviation sector. Turkey\u2019s transport sector has been growing not only in terms of its
\nsize but also in terms of quality of the network. According to the quality indexes for
\ntransport infrastructure such as those of World Competitiveness Report and World
\nBank\u2019s Logistics Performance Index, Turkey ranks above Poland.
\nDespite recent improvements, Turkey\u2019s infrastructure size and quality still lag behind
\nother OECD and EU countries. There is need for improvement in the infrastructure
\nespecially in railroads and ports. It is emphasized that by improving the transport
\ninfrastructure Turkey could help to reduce regional disparities. Improved transport size
\nand quality will not only support international trade but also facilitate increased productivity and competitiveness of the Turkish products. The Turkish Government
\nrecognizing the needs in the sector has set ambitious targets for 2023, the 100th
\nanniversary of the establishment of the Republic of Turkey, in the new transport strategy
\ndocument.1 The document advocates a modal shift between roads and railways. In the
\nnew strategy, the Government\u2019s target is to increase the share of railways from 4.76
\npercent to 15 percent in freight transportation and from 2.22 percent to 10 percent in
\npassenger transportation by 2023. These targets require a reduction in the share of road
\ntransport from 80.66 percent to 60 percent in freight and from 89.59 percent to 72 percent
\nin passenger transportation. The Government announced plans to expand highways by
\nthree times, from 2,250 km to 7,500 km, and almost double the length of divided roads by
\nthe end of 2023. Similarly, the plan more than doubles the railway infrastructure capacity
\nby 2023.<\/p>\n
\nChapter 2 concentrating on road freight transportation reveals that the liberalization of
\nroad freight transport services is a daunting task as shown by the experience of the EU.
\nThe liberalization of road freight transport services requires harmonization of rules and
\nregulations in the road transport sector among the Member and Candidate Countries, and
\nstrict implementation of these rules and regulations, which concern market access and
\ncompetition, pricing and fiscal conditions, social conditions, technical conditions, and
\nroad safety. In addition the EU states that the infrastructure should be accessible to all
\ncurrent and potential service providers on a non-discriminatory basis, and road
\ninfrastructure as a whole should be sufficient. Specific prescriptions for modernization
\nand efficiency of border crossing points for customs procedures are provided.
\nThe EU has taken major steps in strictly implementing the road freight acquis, but
\nproblems remain in the field of tax harmonization among Member Countries, also due to
\ndifferent interpretations of the rules on vehicle standards and drivers\u2019 working conditions.
\nAlthough the EU sets minimum and maximum taxation thresholds, taxation of fuels and
\ncharges for infrastructure vary considerably among Member Countries. Similar
\nconsiderations apply to drivers\u2019 working conditions. There may also be lack of
\nconfidence in the ability or the will of the Member States to enforce the harmonized rules
\nand regulations. To avoid problems in this area there is a need for harmonization of
\ninspection practices among the Member Countries. One case where the EU has failed to
\ncreate a single road freight transportation market is the road cabotage. Although cabotage
\nwas liberalized in 1993 with the adoption of Council Regulation 3118\/93, it was not
\npossible to overcome the protectionist leanings within the Community. Several countries
\ntried to restrict cabotage by interpreting temporary basis on their liking. At the end the
\nCommission adopted the Regulation 1072\/2009. Article 8 of that Regulation states that
\nevery haulier is entitled to perform up to three cabotage operations within a seven day
\nperiod starting the day after the unloading of the international transport.
\nIn the case of Poland we note that the liberalization of Polish freight transport sector is
\ndriven 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,
\ncabotage and community licences are currently being introduced into national legal
\nframework, in particular the Law of Transport. While the national legislation is currently
\nbeing updated, the EU law applies and it carried out through decisions of the minister
\nrelevant to transport.
\nOn the other hand, Turkey has started the process of adopting and implementing the
\nlegislative, regulatory and institutional framework of the EU road freight transport sector.
\nIt has adopted large number of EU rules and regulations in road freight transport sector
\nconcerning market access and competition, pricing and fiscal conditions, social
\nconditions, technical conditions, and road safety. The country by changing the regulatory
\nregime aims to increase competition in the sector, and also increase access to the EU road
\nfreight transportation market. But as in the case of Poland, major problems are faced in
\nthe implementation of these rules as well as with the improvement of infrastructure in
\nTurkey.<\/p>\n
\nIn chapter 3 we consider the rail transport sector. In the EU liberalization efforts started
\nduring the 1990s. The main objectives of the rail reforms introduced in Europe were: (i)
\nto improve competition; (ii) to create more and better integrated international freight rail
\nservices; (iii) to improve the efficient use of infrastructure capacity; (iv) to facilitate the
\ncreation of a single European rail space; and (v) to reduce the declining modal share of
\nrailways. The first reform package started with directives issued in 1991, 1995 and 1996.
\nThe Second Railway Package adopted in 2004 provided a framework for further
\nliberalization of the freight market and harmonization of the regulation of safety and
\ntechnical standards across the EU. The third package introduced in 2007 granted the right
\nof access to the infrastructure in all Member States, introduced a European driver license
\nallowing train drivers to circulate on the entire European network and defined passengers’
\nrights and obligations that ensure basic rights for passengers in such areas as insurance,
\nticketing, and passengers with reduced mobility.
\nAlthough over the last two decades the EU managed to build a good basis for a genuine
\nsingle market for railway transportation, the Commission of European Communities
\n(2010) points out that a single European railway area based on an integrated
\ninfrastructure network still is not established. The Regulation No 913\/2010 on European
\nnetwork for competitive freight is aiming at the development of European rail network
\nfor competitive freight by establishing rules for the creation and organization of
\ninternational rail corridors for competitive rail freight.
\nDuring the last two decades Poland has made significant progress in opening-up its
\nrailway market to domestic and foreign competition. This progress can be illustrated by a
\nrelatively high ranking of Poland among EU states, as expressed using rail liberalization
\nindices reported by IBM Business Consulting Services (2011). Progress was made in
\nterms of legal liberalization, measured by the LEX index and in real opening of the
\nmarket (ACCESS index). The increased competition is especially pronounced in freight transports. By now several foreign Railway Undertaking started their operations and
\ngained important shares of Poland\u2019s market. In the case of passenger transport the
\nincreased competition is mainly among domestic firms.
\nDespite the progress in the access liberalization the share of railways in Poland is
\ngradually decreasing in the intermodal split. The major challenge is the necessity to
\nmodernize Polish railway infrastructure. Until 2008 the level of infrastructure
\ninvestments was very low by standards of old EU states. The situation is improving since
\n2009, when substantial amounts of public investments with the support from the
\nEuropean structural funds have been spent on railway infrastructure and rolling stock.
\nAnother major challenge is to ensure the interoperability of the Polish network with the
\nTrans-European network of high speed lines, as well as the interoperability of the Trans-
\nEuropean conventional railway system.
\nThe rail industry in Turkey is dominated by Turkish National Railways (TCDD) which is
\na state owned, vertically integrated company that not only deals with provision of
\ninfrastructure, but also with the supply of both freight and passenger services. It is
\nresponsible for operating and renewing railways, ports, and piers; guiding and
\ncoordinating affiliated companies; and carrying out complementary activities regarding
\nrail transport such as land transport that includes ferry operations. In 2005, a project was
\nlaunched by the TCDD to open the railway market, to establish the legislative framework
\nin accordance with the EU acquis and to re-structure the TCDD. In the new
\norganizational structure for the rail sector, TCDD would become the infrastructure
\nmanager, continuing to operate as a public enterprise. The rolling stock, tracks, track
\ncomponents, and signaling will be under the supervision of TCDD. In addition, a new
\njoint stock company, Turkish Railway Transportation Corporation, will be created as a
\nrail undertaking, providing passenger and freight rail services as a subsidiary of TCDD.
\nThe future plans for the Turkish railway sector include among others the strengthening of
\nthe administrative capacity in regard to safety and interoperability, analyzing current
\nrailway safety rules for gap analysis, examining Technical Specifications for
\nInteroperability for preparing National Safety Rules, training the staff about
\ninteroperability, establishing a safety unit at TCDD, and preparing a Safety Management
\nSystem. The existing Railway safety rules are to be rearranged.<\/p>\n
\nIn chapter 4 we analyze the maritime transport sector. Since maritime transport is
\ninherently international in character, and vessels on most voyages must operate under the
\nregulatory requirements of many jurisdictions, there is an inherent need for
\nharmonization across countries. Countries need to harmonize their own rules and
\nregulations to international rules and regulations, which are classified as (i) regulations
\nrelated to commercial operations and practices and (ii) regulations related to safety and
\nenvironmental regulations. Compared to international rules and regulations the EU rules
\nand regulations in the maritime sector are generally much stricter.
\nThe process of adjusting Polish regulations, in terms of maritime transport, to EU\u2019s
\nlegislation required many novelizations. In order to provide the legal and institutional
\nconditions for the application of the principle of freedom of establishment Poland has
\nintroduced the novelized Act of Economic Activity, abolishing the business license
\nrequirement for foreign entities willing to conduct business in maritime transport.
\nThe competitive position of European merchant fleet is affected by state subsidies. The
\nguidelines on State aid to maritime transport were updated in 2004 (2004\/C 13\/03), and
\ninclude a whole list of possible privileges which can be implemented in order to
\nencourage the ship owners to return to European flags. They include inter alia: (i)
\nreplacement of income tax by flat rate tonnage taxation system (which depends on the
\ntotal volume of transport instead of the financial outcome of the ship owner), (ii)
\nreduction or elimination of social security contributions for seafarers (iii) reduction or
\nelimination of other social benefit payments incurred by the shipowners and (iv)
\nreimbursement of expenditures incurred on upgrading skills of seamen.
\nThe accession to the EU forced Poland to follow European standards on maritime safety
\nand security. Poland became a member of the European Maritime Safety Agency
\n(EMSA). Ships flying the Member Country\u2019s flags are subject to frequent inspections,
\nthough the frequency depends on the assigned risk profile. Poland has signed all 19 of
\nILO conventions concerning seafarers, 2 concerning fishermen and 2 concerning
\ndockworkers. On March 18, 2009 Poland adopted the Polish Maritime Policy in 2020.
\nThe document establishes the basis for Polish maritime policy, to implemented in
\naccordance with the guidelines presented in \u201cAn Integrated Maritime Policy for the
\nEuropean Union\u201d.<\/p>\n
\nwith the OECD Common Shipping Principles and has a reservation on Note 1 of the
\nOECD Code of Liberalization of Current Invisible Operations. Turkey has signed the UN
\nLiner Code but has not ratified it yet. It has no laws and regulations governing the
\noperation of liner conferences. Turkey has signed some of the international maritime
\nconventions. Regarding regulations on safety and the environment, we note that Turkey is
\none of the 38 states that have not signed the \u201cThe United Nations Convention on the Law
\nof the Sea\u201d (UNCLOS). The country signed only 12 of the ILO conventions concerning
\nseafarers and dockworkers. Turkey is a signatory to many of the IMO rules and
\nregulations. According to the European Commission (2011), ship sourced emissions,
\nmaritime emergency response, reception of waste from ships, and handling of dangerous
\ngoods in Turkey are areas that call for closer scrutiny.
\nTurkish regulations until 1983 required that all imports of public enterprises and public
\nentities be transported by Turkish-flag vessels. This restrictive policy was liberalised in
\n1983 by Decree 152, which stipulates that all imports for the account of public entities
\nare to be carried on board Turkish-flag vessels if the freight rate is not more than 10
\npercent higher than that quoted by foreign operators. On the other hand, according to the
\nCabotage Act, cabotage is reserved to national flag carriers, and maritime transport among Turkish ports is assigned to Turkish ships only. Furthermore, towage, pilotage,
\nand other services related to ports are executed only by Turkish ships.
\nTurkey is in the process of adopting and implementing the legislative, regulatory and
\ninstitutional framework of the EU maritime freight transport sector. The country by
\nchanging the regulatory regime aims in the long run to increase competition in the sector,
\nand gain market access to the EU market. In December 2003, Turkey adopted an
\nambitious five-year Maritime Transport Action Plan for the enhancement of maritime
\nsafety. This action plan sets out a road map for legislative alignment with the acquis on
\nmaritime safety, measures aimed at strengthening administrative structures (in the area of
\nflag State and port State control) and training and equipment needs.<\/p>\n
\nIn chapter 5 we consider the air transport sector. Economic liberalization of air transport
\nservices means not only liberalization of passengers and freight transport by aircraft, but
\nalso liberalization of ancillary services such as air traffic control services, airport
\nservices, aircraft repair, computer reservation systems (CRS), ground handling, and
\naircraft repair and maintenance services subject to the condition that minimal safety,
\nsecurity and environmental consideration are secured. Since air transport is inherently
\ninternational in character, and carriers must operate under the regulatory requirements of
\nmany jurisdictions, there is need for harmonization of rules and regulations across
\ncountries.<\/p>\n
\nthree EU liberalization packages the air services market in the EU has been completely
\nreshaped to provide tighter competition, more efficient use of infrastructure and more
\nbenefits to consumers. With the third liberalization package regulations regarding
\nlicenses to air carriers, access for air carriers to intra-Community air routes, and fares and
\nrates for air services was supplemented by the Regulation No 1008\/2008 on common
\nrules for the operation of air services. The 2008 regulations liberalized and standardized
\nterms of the granting of licenses to carry out air transportation services and strengthened
\nthe supervision of the national authorities, introduced a complete freedom to set fares by
\ncarriers and regulations on the code-sharing operations. Hence, the new regulation
\nincreased the freedom of operation, while tightening the rules on finance and tariff
\ntransparency.<\/p>\n
\nchanged completely the legal environment in Poland. The major change was the creation
\nof the national Civil Aviation Office (CAO) being the aviation supervision authority and
\nresponsible for the implementation of the EU regulations. The CAO is responsible inter
\nalia for registers of aircraft, aerodromes, aviation ground facilities, flight safety,
\nexamination of safety levels in civil aviation, and general application of civil aviation
\nregulations. Poland has implemented the core elements of the Single European Sky
\nlegislation. At the time of Poland\u2019s accession to the EU aviation market was open to
\ncompetition between airlines and airports.
\nThe Polish Aviation Law, as amended in 2006, defines public airport for commercial
\nflights. The management of the airport for public use requires a license. Detailed
\nregulations describe precisely the conditions for setting up and operating public airports.
\nBefore the accession to EU only two airport management companies received permits
\nand the end of 2010 there were already ten entities that have permission to manage
\npublic use airports.<\/p>\n
\nin air flights. The Aviation Law is implementing legislation and Council Regulation
\n(EEC) No. 2407\/92 on licensing of air carriers. The access rules for carriers to routes
\nwithin the EU, in turn, were defined in Council Regulation (EEC) No 2408\/92. In the
\nyears 2004 – 2011 there have been major changes in the number of entities with permits
\nand licenses to perform aviation activities. Since the Polish accession to the EU, the
\nnumber of domestic entities that have a license to operate in the field of air transport has
\nsignificantly increased. Also, the number of foreign (EC) air carriers operating in Poland
\nincreased dramatically. In consequence the Polish market became attractive not only for
\nthe \u201ctraditional” European carriers, but also for the low-cost carriers. In 2002-2003, in
\nPoland, there were 28-30 airlines offering their services. In subsequent years, some of the
\nairlines left the Polish market, but there are also new firms entering the market. In the
\npre-crisis peak year – 2008, 46 aircraft carriers operated in the Polish market. The rapid
\nincrease in passenger traffic has been observed after Poland\u2019s accession to the EU. In
\n2011, the Polish airports handled a total of 21.7 million commercial traffic passengers, an
\nincrease of 6.1 percent compared to the previous year.
\nIn Turkey private air carriers could be established with the enactment of Law No. 2920
\non Civil Aviation in 1983. Air carriers for domestic or international \u2018scheduled\u2019 flights
\nare authorized to provide services if they are registered in Turkey and operate a minimum
\nof five registered aircraft with at least 100 seats. However, aircrafts can be leased and
\nthere is no requirement of ownership. In 2001 as the Turkish aviation sector was
\nundergoing liberalization an amendment to the Turkish Civil Aviation Code was adopted
\nallowing air carriers to set airfares without the approval of the Ministry of Transportation.
\nWhen setting the tariffs, airline operators should obtain the approval of the Ministry in
\nadvance, and they are under the obligation to advertise new tariffs at least 3 days before
\nthey are implemented. Thus, the government since 2001 no longer intervenes in the
\npricing of non-scheduled or air taxi services. In 2004 some Turkish air carriers started
\nscheduled domestic flights including to and from Istanbul, contributing to the end of the
\nState-owned operator\u2019s de facto monopoly in the domestic scheduled flights.
\nTurkey is a member of the International Civil Aviation Organization (ICAO), European
\nCivil Aviation Conference (ECAC), European Organization for the Safety of Air
\nNavigation (EUROCONTROL), Joint Aviation Authority (JAA), and it is party to a large
\nnumber of international conventions such as the Chicago Convention. Safety regulations
\nfor civil aviation has its legal basis through (i) the organization and functions of the
\nMinistry of Transportation, Maritime Affairs and Communications (MTMAC), (ii)
\nTurkish 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
\nEUROCONTROL Convention.<\/p>\n
\nbasis of reciprocity within the framework of bilateral agreements. Charter services are
\nauthorized on the basis of reciprocity under the rules of the European Civil Aviation
\nCommission (ECAC), of which Turkey is a member. Cargo transport is under the
\nprovisions of Law No. 2920 and relevant articles of the Regulation on Commercial Air
\nTransport Operations, as well as the applicable provisions of bilateral air transport
\nagreements signed by Turkey. Turkey has signed bilateral air transport agreements with
\n122 partners. Under these agreements, Turkish carriers are operating scheduled services
\nto 175 cities abroad. Some of these agreements restrict market access to the signatory
\nstates\u2019 respective national carriers. A legal duopoly has therefore been created for the
\nspecific international routes covered by these Agreements. These restrictions benefit the
\nTurkish Airlines (THY) to the detriment of all the other domestic carriers who are
\nprevented from flying to the international destinations covered by these Agreements.
\nAlthough major steps have been taken in Turkey to liberalize the aviation sector since
\n2001, European Commission\u2019s 2011 Regular Report on \u201cTurkey\u2019s Progress towards
\nAccession\u201d maintains that the process is not complete. According to the report an EUTurkey
\nhorizontal aviation agreement is at a final stage. Since Turkey is willing to be part
\nof the single European sky, a pre-accession strategy for the aviation sector has been
\ndeveloped. The strategy covers a set of priority actions on human resources, environment,
\nmarket regulation and aviation safety that needs to taken by Turkey. Regarding air traffic
\nmanagement the report notes that there are no developments concerning the exchange of
\nflight data and requirements for the application of a flight message transfer protocol used
\nfor the purpose of notification, coordination and transfer of flights between air traffic
\ncontrol units. Moreover, air traffic management according to the report is suffering from
\na lack of regional cooperation. In addition, to align with the acquis in the area of air
\nsafety, Turkey is expected to accept European Aviation Safety Agency (EASA) as the
\ncompetent body to carry out standardization inspections in the field of air traffic
\nmanagement and air navigation services. Finally, the Report notes that further efforts are
\nneeded in order to improve implementation on slot allocation, particularly as regards the
\nindependence of the slot coordinator.<\/p>\n
\nThe final chapter of the study, namely Chapter 6, is devoted firm-level data analyses. In
\nthe first stage we compare Polish firms active in transport industries to their counterparts
\nin other EU countries, and assess some most notable differences between the transport
\nindustry and the rest of the economy. The results show that Polish firms in transportation
\nsector are usually larger than those in other EU countries, especially in the railway and
\nroad transport sectors. An exception is air transportation where Polish firms are visibly
\nsmaller. In terms of labor productivity, Polish firms are roughly six times less efficient in
\ncomparison 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
\ncountries.
\nThe analysis of market characteristics of EU firms reveals that price cost margins (PCMs)
\nare \u2013 despite liberalization efforts – fairly stable in all transport sectors over the analyzed
\nten years period. In the case of Poland, while competitive pressure in rail services is
\nrather low, inefficiencies in the major rail service providers result in poor financial
\nconditions of single enterprises. We also observe a strongly decreasing minimum
\nefficient scale (MES) along the whole period for EU airline firms. A number of low-cost
\nfirms have benefited from lower technological barriers to entry and the competitive
\npressure has risen considerably. On the other hand, the highest minimum efficient scale
\nwas observed for railway companies, for which the fixed investment in infrastructure is
\nstill very important and it can impede the entry of smaller firms.
\nThe subsequent analysis of export performance, using \u2018Business Environment and
\nEnterprise Performance Survey\u2019 (BEEPS) data base elaborated by European Bank for
\nReconstruction and Development (EBRD), demonstrated a number of similarities
\nbetween manufacturing and transportation sectors. Labour productivity has a relatively
\nrobust, positive impact on probability of exporting, both in the case of manufacturing and
\ntransportation services. In both cases quality certificates and introduction of new products
\nare among the factors that tend to increase to probability to export. Quality certificates
\nare meant to reduce information asymmetry and may facilitate trade, while introduction
\nof new products may be perceived as ways to gain new markets and increase market
\nshare in existing markets. Contacts with foreign markets through imports do improve the
\nprobability to export in both sectors. However, a number of important differences
\nbetween the manufacturing and transportation sectors can be identified. In particular,
\nlarger manufacturing enterprises have a higher probability of exporting, while the result
\ndoes not hold for transport firms. This may stem from the fact that some of the large
\ntransport companies in analyzed countries are not necessarily export oriented \u2013 as their
\nnatural transport activity focus on the domestic market, which is the case in e.g. public
\ntransportation.
\nHuman capital seems to be important for export activity of manufacturing firms; however
\nthis result seems not to apply to transport firms. Firms in the manufacturing sector that
\nrely on internal funding tend to export less frequently but this result does not hold for the
\ntransport firms. As far as institutional environment is concerned, higher crime rate
\n(robbery) is among factors that can be detrimental to exporting activity . Its negative
\nimpact is not completely robust across analyzed samples, although it seems to have a
\nrelatively significant negative impact in the case of Poland. On the other hand, while the
\nperceived corruption does not seem to negatively affect the exporting activity, it seems
\nthat exporters in the transport sector tend to perceive more problems with corruption than
\nnon-exporters. Similarly, while difficulties in obtaining permits do not generally affect
\nthe probability of exporting, they do have a negative impact on exporting in the case of
\nthe transport industry. This finding does not apply to Poland, where difficulties with
\npermits do not have a statistically significant impact on export activities.
\nIn the last section of the chapter we investigate first the firm characteristics of Turkish
\nenterprises in different transportation sub-sectors, and turn thereafter to the analysis of
\nthe determinants of export activity of Turkish transportation firms. The analysis revealed
\nthat transportation service exports and imports are rather rare activities in transportation
\nsector. Regarding services trade we note that transportation sub-sectors are engaged more
\nin exporting and rarely in importing. Although the percentage of firms that engage in
\ntrade of transportation services is rather low, those firms account for a large share of
\neconomic activity. On the other hand, the results of the determinants of export activity
\nsuggest that labor productivity is positively related to the probability of exporting.
\nSimilarly as in other empirical studies, the firm size is positively related to the probability
\nof exporting. Moreover, the coefficient of large firm is greater than the coefficient of the
\nvariable for medium firms, indicating vertical integration in transport service exports.
\nThe estimated parameter on the capital-labor ratio is positive indicating that exporting
\nfirms in Turkey are usually capital intensive. Furthermore, the empirical results suggest
\nthat firms with foreign participation involve in export activity more than the domestic
\nones.
\nTo study the impact of competition on labor productivity we model labor productivity as
\na function of capital intensity, exports, size of the firm, and competition variables such as
\nprice-cost margins and mark-ups. Empirical results suggest that firms that are more
\ncapital intensive have higher productivity. The coefficient of the size of the firm is
\npositive and significant indicating that larger firms are more productive. Furthermore,
\nfirms that are involved in services trade are more productive, and firms that have foreign
\nownership are also more productive. But the coefficient of price-cost margin and mark-up
\nvariables turn out to be positive although the signs of these variables are expected to be
\nnegative. This result may be due to the fact that liberalization within the domestic market
\nhas been achieved in Turkish transportation sector, especially in road and air subsectors
\nduring the 1980’s and 1990s. The empirical data used in the study do not cover this
\nperiod. On the other hand, external liberalization of the transportation sectors as
\nemphasized in Chapters 2-5 of our study is still in its initial stages. Since external
\nliberalization of transport services requires the adoption and implementation of the
\nlegislative, regulatory and institutional framework of the main trading partner, namely
\nthose of the EU, external liberalization will be achieved only over time. Hence, the data
\ndo also not indicate the results of external liberalization. Finally, we note that the share
\nof firms engaged in foreign trade is very small.<\/p>\n
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\nSEC(2011) 1201, Brussels
\nDornbush, R., S. Fisher and P. A. Samuelson (1977) \u201cComparative Advantage, Trade,
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\nSwitzerland and Norway.
\nLimao, N. and A. Venables (2001) \u201cInfrastructure, Geographical Disadvantage, Transport
\nCosts, and Trade\u201d, The World Bank Economic Review, 15, 451-479.
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\nIndustry Productivity\u201d, Econometrica, 71, 1695\u20131725.
\nMinistry of Transport and Communications (2010) \u2018Transportation and Communications
\nStrategy \u2013 Target 2023\u201d, Ankara: MTC
\nSamuelson, P. A. (1964) \u201cTheoretical Notes on Trade Problems\u201d, The Review of
\nEconomics and Statistics, 46, 145-54.<\/p>\n","protected":false},"excerpt":{"rendered":"