Regional inequalities and economic convergence in Turkey

Large and persistent regional development disparities between eastern and western regions have always been the main concerns of policy makers and regional development policies of the government. Turkey has developed a set of regional development tools and mechanisms to reduce these disparities However, traditional top-down and state-oriented regional policies implemented until the 2000s could not meet the needs of the country. Thus, Turkey went through a transformation in its regional development paradigm after 2000 and started to internalize more bottom-up and participatory approach. The purpose of this study is to analyze regional inequalities and investigate the evidence of economic convergence across NUTS 2 regions in the post-2000 period. Although there are earlier empirical studies on regional convergence, studies concentrating on the post-2000 period are very limited. Thus, this study aims to provide new insights into the nature of the convergence debate in Turkey. We employed both sigma and beta convergence analyses. Findings of sigma convergence are in line with the literature that inequality between regions decreases in the recession periods and increases in the economic expansion periods. Beta convergence results obtained from cross-sectional and panel estimations indicate the existence of absolute convergence. Moreover, exploratory spatial data analysis and beta convergence analysis illustrate the strong evidence of spatial autocorrelation in distribution of regional income and suggest taking spatiality into account in convergence analysis. Keywords: Regional Disparities, Regional Inequality, Convergence, Sigma, Beta, Spatial Autocorrelation, Spatial Econometrics