A Spatial Perspective on Booms and Busts: Evidence from Türkiye

Javier Eduardo Baez Ramirez, Cigdem Celik and Varun Sridhar Kshirsagar

No 10553, Policy Research Working Paper Series from The World Bank

Abstract: This paper combines official subnational and remote-sensed data to uncover the relationships between business cycles in Türkiye and the corresponding changes in economic activity at lower levels of spatial aggregation. The objective is to document changes in the nature of growth within and across business cycles, with a focus on understanding how sectoral changes interact with within-country remoteness during each phase. The paper shows that: (i) the significant growth between 2010 and 2017 was bookended by recessions in which gross domestic product per capita fell more sharply the closer a province was to one of the two largest cities; (ii) the two recessions differed in terms of their sectoral impacts, with manufacturing declines inversely related to remoteness during the first recession and positively related during the second; (iii) there were large increases in the construction sector’s gross value added during the post-2009 rebound—consistent with unprecedented increases in nighttime light luminosity—with growth positively related to remoteness; and (iv) changes in nigh ttime light luminosity are correlated with changes in physical activity: a 10 percent increase in nighttime lights is associated with a 3.5 percent increase in construction output and a 1.5 percent increase in manufacturing output. Together, the results suggest that recessions and recoveries that may appear to be similar at a macroeconomic scale may be driven by very different changes at more disaggregated spatial scales and have varied impacts on regional convergence.

Date: 2023-08-24
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