Convergence theories: Turkey and EU regions

The question of whether income levels of different economies tend to convergerepesents one of the important issues that was first discussed in 1956 by Solow in hiseconomic growth study and still has een discussed ever since. In the neoslassical theory,physical capital accumulation is the driving force of output growth and dimishingreturns to physical capital is a key assumption of the neoclassical theory. As more andmore capital is employed, its marginal product diminishes. So the economies startingout with a lower physical capital base will experience higher growth rates andeventually converge to the rich ones.In this context, this study aims to provide an assessment about income convergenceacross the regions of European Union and Turkey?s 67 provinces. Income convergenceis analysed in terms of beta and sigma convergence. Empirically, convergence has beentested by regressing the growth rates of the set of economies being studied on the initialor starting level and growth rate is viewed as evidence for absolute convergence. Noevidence has been found for regional convergence of per capita income among regionsof EU and provinces of Turkey for the period 1980-2001. And also convergence doesn?toccur among Turkey?s 67 provinces between 1980-2001 but EU regions convergeamong themselves during 1980-2003.Key Words: Convergence, Growth Theories