Transportation--Communication Capital and Economic Growth: A VECM Analysis for Turkey

Aysegul Çorakcı Eruygur, Muhtesem Kaynak and Merter Mert

European Planning Studies, 2012, vol. 20, issue 2, 341-363

Abstract: This paper analyses the short- and long-term relationships between the transportation--communication capital and the output for Turkey. The study applies a Cobb--Douglas production function under the assumption of constant returns to scale and employs co-integration analysis by estimating a vector error correction model (VECM). As a result of the VECM estimation, one co-integrating relationship is detected. The results based on the impulse response function analysis imply that per labour transportation--communication capital appears both to have been a crucial input in the Turkish productive process and to have had a positive crowding in effect on the per labour non-residential total capital formation. Moreover, the results support the argument that the transportation--communication capital has a lagged impact on economic growth. The long-term accumulated elasticity of output to transportation--communication capital has been found to be 0.59. The long-term accumulated marginal product was also calculated. It implies that a 1 Turkish Lira increase in per labour transportation--communication capital results in a long-term rise of 1.45 Turkish Liras in per labour output. All these findings suggest that transportation--communication capital may be a powerful tool for policy-makers to promote long-term per labour real output growth in Turkey.

Date: 2012
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Citations: View citations in EconPapers (8)

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DOI: 10.1080/09654313.2012.650901

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