Dynamics of Regional New Firm Formation in Turkey

Abstract

New firm formation is an important determinant of regional development. Entrepreneurial decisions on location choice are affected by numerous factors. Given the importance of local regional characteristics, this study focuses on the dynamics behind the regional formation of new firms in Turkey using balanced panel data from 1997 to 2006. An initial set of analyses underline the ongoing persistence of the unequal distribution of new firms. Among various factors, results obtained from different panel models suggest the importance of local demand, provincial business cycles, human capital development, and financial availabilities to explain the regional differences of new firm formation in Turkey. These results, which are robust to the inclusion of spatial links, also confirm that the proposed channels are common for manufacturing, services, and trade-based production.

Do European Funds support the formation of firms? New evidence from Italy

“…Recent literature that focuses on the spatial differences in new firm formation in Italy is limited and there is no contribution to the effect of public policy expenditure on entrepreneurship. 3 In the context of the Great Recession, 3 The role of public expenditure was investigated by Karahasan (2015) who analysed new firm formation in Turkey during the period 1997-2006. His work confirms the key role of local demand, business cycles and human capital, in both manufacturing and the service sector.…”

Government Quality and Regional Development in Turkey

“…Second, as discussed in Charron et al (2014 and2015) the link between government quality and development may have instabilities among the geography; that is even for developed northern European countries regions with sound working institutions are also the ones with above average income; for some periphery countries of Europe this relationship does not hold. This brings out an additional concern on a non-linear relationship between the level of regional development and institutional quality.…”

“…However as described by RodriguezPose (2013) 2013 is the most comprehensive data to examine the distribution of the institutional quality at the regional level (Charron et al 2014 and2015). Even the content of the index covers a wide range of governance areas, still a number of concerns stand still.…”

“…On contrary it is relatively less explanatory to focus on spillovers originating from greater distances as spatial spillovers seem to weaken as we try to connect each province by using distance as a discount factor. Karahasan (2015), Karahasan, Doğruel and Doğruel (2016) factors shaping the evolution of economic activity is also regionally dispersed unequally, leaving eastern regions less developed compared to the ones among the western territory. However our findings on the decomposition analyses indicate that there are sizable similarities between some eastern and western regions that historically share different economic fundamentals and development levels.…”

“…In a similar vein individual's experiences regarding different forms of institutions can be divergent as this can be subject to disparities originating from ethnicity, gender, religion and geography. For instance Lapuente (2014 and2015) emphasized that there are substantial differences among the regions of European Union (EU) member states regarding the regional quality of government (including the candidate countries Serbia and Turkey). Not only the cross country differences of the quality of government services but also the within country differences are observed to be significant.…”