The Spillover Effects of Public Capital Formation on the Manufacturing Industry in the Turkish Geographical Regions
This paper investigates the spillover effects of public capital formation on the Turkish private manufacturing industry at the regional level over the period 1980-2000. The aggregate effects of public capital cannot be captured entirely from the direct effects of public capital installed in the region itself. Therefore, we estimate vector autoregression (VAR) models for the seven geographical regions of Turkey by including capital formation installed outside of the region. The results show that public capital affects private sector performance positively in all regions apart from Central Anatolia. Positive spillover effects of public capital can be seen in some regions, like Marmara.
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