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Do Investment Incentives Promote Regional Growth and Income Convergence in Turkey?

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  • Hulya Saygili

Abstract

This paper contributes to the literature on the growth and income convergence effects of investment incentives in Turkey in four ways: Firstly, it uses the most recent investment incentives data from 2004-2018 for 81 provinces grouped into 6 regions. Secondly, it investigates the significance of the lagged impact of investment incentives. Thirdly, it applies Prais-Winsten regressions with heteroskedastic panels-corrected standard errors (PCSE) to address autocorrelation, heterogeneity, and endogeneity problems in a panel context. Fourthly, in addition to neoclassical conditional Beta-convergence, it modifies the Sigma-convergence approach to investigate the direct impact of investment incentives directly on regional convergence. The estimation results indicate convergence, but investment incentives have significant time-lagged impacts in relatively high income regions only.

Suggested Citation

  • Hulya Saygili, 2020. "Do Investment Incentives Promote Regional Growth and Income Convergence in Turkey?," Working Papers 2013, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
  • Handle: RePEc:tcb:wpaper:2013
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    File URL: https://www.tcmb.gov.tr/wps/wcm/connect/EN/TCMB+EN/Main+Menu/Publications/Research/Working+Paperss/2020/20-13
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    More about this item

    Keywords

    Regional income convergence; Regional investment incentives; Panel data analysis; Turkey;
    All these keywords.

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R50 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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