Regional Economic Convergence in Turkey: Does the Government Really Matter for?

Abstract

Solow (1956) has made an essential contribution to the Neo-classical growth approach through the economic convergence hypothesis. It assumes that poorer countries' or regions' per capita incomes tend to grow at faster rates than the richer ones. Convergence could occur either among a group of economies with the same steady states or within regions in which their fundamental dynamics differ, and thus they exhibit multiple steady states. This study aims to investigate convergence with respect to GDP per capita across NUTS 2 regions in Turkey for the time period 2004-2014. In the convergence process, we also inquire into role of government in terms of regional government investments and fixed investment incentives. All the empirical results confirm the validity of the convergence hypothesis at a regional level. Also, in the context of the convergence process, it is possible to conclude that the role of government is likely to be decisive in solving regional economic disparities.

Sosyal Politika Perspektifiyle İstihdamın GSYİH nın Bölgesel Dağılımından Sağladığı Sosyal Refah Düzeyleri (2004-2014) - Social Welfare Levels Provided by Employed in the Perspective of Social Politics from the Regional Distribution of GDP (2004-2014)

“…These amounts were realized as realization of 2,044.5 billion TL in 2014 and loss of social welfare of 221 billion TL in GDP felt as 1,823.5 billion TL (See Table 2). Karaca (2018) for the period between 2000-2010, Gündem (2017) for the period between 2004-2011, Gömleksiz et al (2017 for the period between 2004-2014 found a decrease in income inequality between regions. In contrast, Karahasan (2017) argued that regional inequalities for the period 2004-2014 have become permanent.…”

“…In addition, since 2011 there have been at least eight more studies analyzing regional inequality based on the 2004 data set and later. These are: Abdioğlu and Uysal, 2013;Karahasan, 2015;Uyaner and Volkan, 2016;Gündem, 2017;Gömleksiz et al, 2017;Karahasan, 2017;Tuğrul, 2017;Karaca, 2018.…”

Türki̇ye’de Yatirim Teşvi̇kleri̇ni̇n Bölgesel Ekonomi̇k Büyüme Üzeri̇ndeki̇ Etki̇si̇: Ampi̇ri̇k Bi̇r Anali̇z

“…One of the main reasons for this study is to reveal the impact of investment incentives on the high level of regional differences in Turkey. The relationship between investment incentives, public expenditures, regional differences, and economic growth and development in Turkey has always attracted attention (Tansel and Güngör, 1999;Sağbaş, 2002;Yıldırım et al, 2009;Zeren and Yılancı, 2011;Gömleksiz et al, 2017).…”

“…There are also regional studies examining the effects of investment incentives for Turkey (Karaalp, 2014;Selim et al, 2014;Demirtaş and Aksel, 2018;Baykul et al, 2019). Gerni et al (2015), Sevinç et al (2016) and Gömleksiz et al (2017) determined that the investment incentives had positive impacts on economic growth in 26 development regions of Turkey for different years. Sağbaş et al 's (2016) study obtained significant findings among the regional studies in Turkey.…”

“…There are also incentives such as social security premium support for employees and income tax withholding for the region with the least developed provinces. The differences and divergences in regional economic growth indicators in Turkey are discussed and examined in many studies (Yıldırım et al, 2009;Gömleksiz et al, 2017). Moreover, investment incentives have become the most frequently used fiscal policy implemented after the 1980s to eliminate regional imbalances.…”