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

Hulya Saygili

Working Papers from Research and Monetary Policy Department, Central Bank of the Republic of Turkey

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.

Keywords: Regional income convergence; Regional investment incentives; Panel data analysis; Turkey (search for similar items in EconPapers)
JEL-codes: C23 O47 R11 R50 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-ara, nep-geo and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:tcb:wpaper:2013

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