Table 9.2: TURKEY, Extended production function and comparison of ICA method with EM algorithms

|||**ICA Meth**|**od**<sup>**1**</sup>||**EM Algorithms**<sup>**2**</sup><br>||
|---|---|---|---|---|---|---|
||**Dependent variable: Log of total sales**|||**[1]**|**[2]**|**[3]**|
|**Category**|**Variable**|**Coeff.**<br>**std. err.**|**Boot. st. er.**|**Coeff.**<br>**std. err.**|**Coeff.**<br>**std. err.**|**Coeff.**<br>**std. err.**|
|PF variables|Log-employment<br>Log-materials<br>Log-capital|0.416<br>[0.0492]***<br>0.4184<br>[0.0404]***<br>0.0371<br>[0.0165]**|<br>(0.1088)***<br> <br>(0.0249)***<br>(0.0428)|0.3743<br>[0.0434]***<br>0.4829<br>[0.0429]***<br>0.0548<br>[0.0199]***|0.3421<br>[0.0459]***<br>0.6075<br>[0.0369]***<br>0.0801<br>[0.0190]***|0.3323<br>[0.0467]***<br>0.6052<br>[0.0370]***<br>0.0783<br>[0.0184]***|
|Infrastructures|<br>Days to clearcustomsfor imports (a)<br>Dummy for e-mail|-0.0707<br>[0.0686]<br>0.2866<br>[0.0920]***|(0.0688)<br>(0.1365)**|-0.1497<br>[0.0578]**<br>0.1659<br>[0.0789]**|-0.1206<br>[0.0516]**<br>0.1648<br>[0.0726]**|-0.1399<br>[0.0462]***<br>0.188<br>[0.0720]**|
|Red tape,<br>corruption and|Security expenses (b)<br>Payments to deal withbureaucraticissues (a)|-0.0246<br>[0.0828]<br>-0.011<br>[0.0020]***|(0.0011)***<br> <br>(0.0077)|-0.0117<br>[0.0520]<br>-0.0092<br>[0.0013]***|-0.0504<br>[0.0456]<br>-0.0065<br>[0.0011]***|-0.0647<br>[0.0416]<br>-0.0072<br>[0.0012]***|
|crime|Sales declaredfortaxes (a)<br>Numberof inspections (b)|-0.0226<br>[0.0057]***<br>0.0046<br>[0.0044]|<br>(0.0045)***<br>(0.0597)|-0.0234<br>[0.0046]***<br>-0.0002<br>[0.0026]|-0.0148<br>[0.0042]***<br>0.0001<br>[0.0026]|-0.0177<br>[0.0040]***<br>0.0007<br>[0.0023]|
||Payments to obtaina contractwiththe government (b)<br>Production lost due to absenteeism(b)|-0.0373<br>[0.0315]<br>-0.0054<br>[0.0043]|(0.0058)***<br>(0.0367)|-0.0524<br>[0.0217]**<br>-0.0122<br>[0.0037]***|-0.0274<br>[0.0175]<br>-0.0082<br>[0.0028]***|-0.0514<br>[0.0159]***<br>-0.0094<br>[0.0029]***|
||Dummyfor informalcompetition(b)|0.0044<br>[0.0295]|(0.1203)|-0.0055<br>[0.0236]|-0.0013<br>[0.0189]|-0.0059<br>[0.0196]|
||Delay in obtaining a water supply (a)|-0.1325<br>[0.0634]**|(0.0993)|-0.1388<br>[0.0565]**|-0.0746<br>[0.0559]|-0.0935<br>[0.0600]|
|Finance|Dummyforcreditline<br>Dummyforexternalauditory (a)|0.068<br>[0.0868]<br>0.0863<br>[0.0753]|(0.1383)<br>(0.1117)|0.1157<br>[0.0702]<br>0.0655<br>[0.0461]|0.0744<br>[0.0660]<br>0.0627<br>[0.0397]|0.0778<br>[0.0674]<br>0.0935<br>[0.0406]**|
||Loans in foreign currency (b)|0.0018<br>[0.0009]**|(0.0010)*|0.0013<br>[0.0005]**|0.0008<br>[0.0006]|0.0007<br>[0.0006]|
|Quality, innov.|Staff withuniversity education(b)|0.0095<br>[0.0026]***|<br>(0.0018)***|0.0087<br>[0.0029]***|0.0064<br>[0.0029]**|0.0081<br>[0.0029]***|
|and labor skills|<br>Staff-part time workers|-0.008<br>[0.0030]**|(0.0222)|-0.0046<br>[0.0023]*|-0.0059<br>[0.0016]***|-0.0058<br>[0.0018]***|
|Other control|Production lost due to strikes (b)|-0.1689<br>[0.0634]**|(0.0351)***|-0.1596<br>[0.0435]***|-0.124<br>[0.0322]***|-0.1072<br>[0.0323]***|
|variables|Dummyfor recently privatizedfirm|1.0606<br>[0.2812]***|<br>(0.2511)***|0.8692<br>[0.2579]***|0.6825<br>[0.2478]***|0.6644<br>[0.2508]**|
||Dummy for competition against imported products|0.2069<br>[0.0962]**|(0.2737)|0.1595<br>[0.0736]**|0.0951<br>[0.0603]|0.0755<br>[0.0607]|
||Constant|3.5299<br>[0.7190]***||3.6661<br>[0.5851]***|1.6872<br>[0.3782]***|1.9648<br>[0.3791]***|
||Industry/region/size/time dummies|Yes||Yes|Yes|Yes|
||Observations|1684||1679|1733|1733|
||R-squared|0.73||0.81|0.86|0.86|

Estimating results of equation (1) under different imputation mechanisms for missing data. Those observations with missing values in all sales, labor (labor cost), materials and capital are excluded in all the regressions. 1, 2 See footnotes in Table 9.1.

(a) IC variables instrumented with industry/region average variables. (b) missing values in IC variables replaced by means of ICA method. Source: Authors’ calculations with ICSs.

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