Recalculation of Manufacturing Industry Production Function with Trade Openness and Human Capital: Multi-Dimensional Panel Data Application

Abstract

The manufacturing industry plays a key role in ensuring long-term and sustainable economic development. Although the impact of the service and information technology sectors on economic growth has increased recently, reindustrialization trends have appeared especially in developing and underdeveloped countries. Studies on the manufacturing industry have started to gain importance again within the scope of reindustrialization. In this context, the production functions of the manufacturing industry started to be recalculated and the factors affecting the manufacturing industry became the field of study again. In particular, global trade has become one of the dominant issues in terms of the manufacturing industry. This study aims to calculate the manufacturing industry production function of 40 countries for the period of 2000-2014. While making this calculation, it is aimed to see the effect of trade openness and human capital on manufacturing industry production. For this purpose, multidimensional panel data analysis was used and the Cobb-Douglas production function was calculated. As a result of the analysis, it has been found that labor, exchange rate, trade openness, and human capital have a positive effect on manufacturing industry production.