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- Title
Club Convergence: Do public investments play a role in regional income per capita convergence in Turkey?.
- Authors
COŞKUN, Nuran; DEMİR, Eylül Ece
- Abstract
This paper aims to examine club, conditional and absolute convergence at regional level under the assumption that public investment can be used as a tool to reduce income disparities. Therefore, following Phillips and Sul (2007, 2009) and Lyncker and Thoennessen (2017), as the first step of the empirical analysis, five convergence clubs and a divergent member are identified in real GDP per capita at Turkey NUTS II level for the period from 2004 to 2019. Additionally, the clubs' basic data reveals three important information. The first information is that regions with high GDP per capita receive more public investment than others. Second information is that the share of public investment is not distributed equally in terms of GDP per capita. Third information is that Clubs 1, 2 and TR10 (İstanbul) (the only divergent member) have higher proportion of public investments on average than others. As a result, public capital is not used as a tool to reduce regional inequalities from the government. At the end of the empirical analysis, the dynamic effects of public capital on growth is analyzed using Sys-GMM estimators. From the results, it has seen that public investment is statistically significant and has a positive effect on growth; however, it has quite low coefficient. Also, findings revealed that there isn't absolute convergence at regional level in Turkey. Therefore, when share of public investments are taken into account, there is conditional convergence. With the existence of club and conditional convergence, public capital should be used much more effectively thanks to its ability to reduce income inequalities and merge clubs, otherwise absolute convergence will not occur.
- Subjects
TURKEY; PUBLIC investments; ECONOMIC convergence; PER capita; REGIONAL disparities; INCOME inequality; CLUBS
- Publication
Ege Academic Review, 2022, Vol 22, Issue 3, p323
- ISSN
1303-099X
- Publication type
Article
- DOI
10.21121/eab.1098557