ABSTRACT
The growth of new firms in manufacturing is of particular importance because new firms are a significant source of employment. This chapter analyses the determinants of new firm growth for the Turkish manufacturing industry with special reference to the heterogeneity in growth process of the firms, age, and survival structure of firms. With that purpose, firm growth equation is estimated for the Turkish manufacturing industry for the period 1980–2001 by using alternative estimation methods. Our results show that survival selection should be considered as a crucial determinant on the dynamics of firm growth. Moreover, some characteristics of the firm have strong effects on firm growth for early periods most of all. The results imply that distinctive characteristics of firm growth should be taken into account in designing support policies for the firms/industries. For instance, public policy towards the firms should be designed so as to pay due attention to those firms that do not need to grow, those that cannot grow, and those that can grow as they survive. Industrial support policies should be selective (rather than generic-type) in order to prevent misallocation of resources, and public policies should promote productivity and competitiveness of potential grower firms as a significant source of employment for overall economic growth.
