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Regional Economic Growth in Turkey: The Effects of Physical, Social and Financial Infrastructure Investments

Author

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  • Hulya Saygili
  • K. Azim Ozdemir

Abstract

This paper explores the roles different categories of infrastructure investment play in promoting economic growth across regions in Turkey. Two different approaches, namely partial least square structural equation modeling (PLS-SEM) and heteroskedastic panels corrected standard errors (HPC-SE) are used to compute regional physical, social and financial infrastructural indices and their impacts on income. Overall, the results reveal that differences in infrastructural endowments across Turkish regions explain a significant portion of regional disparity in per capita income. While financial infrastructure has a positive direct effect only, physical and social infrastructures contribute both directly and indirectly. We suggest that policy makers focus primarily on investing in physical infrastructure in order to mitigate the regional income disparity. Secondly, improving education, health and housing facilities as well as financial activities would contribute further diminishing income disparity across regions.

Suggested Citation

  • Hulya Saygili & K. Azim Ozdemir, 2017. "Regional Economic Growth in Turkey: The Effects of Physical, Social and Financial Infrastructure Investments," Working Papers 1716, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    • Handle: RePEc:tcb:wpaper:1716
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    File URL: https://www.tcmb.gov.tr/wps/wcm/connect/EN/TCMB+EN/Main+Menu/Publications/Research/Working+Paperss/2017/17-16
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    More about this item

    Keywords

    Infrastructure investment; Economic growth; Regional analysis; Turkey;
    All these keywords.

    JEL classification:

    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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