The analysis of regional investment incentives system in Turkey

Incentives are one of the most important economic policies implemented in order to direct the investment decisions of economic units. Incentives are implemented by countries for various purposes such as directing investments to specified sectors, reducing regional development differences, increasing employment and increasing international direct investments. While a wide range of incentives are being implemented across the world, it is possible to consolidate incentive instruments in two classes, tax and non-tax incentives. Discussions on the efficiency of incentive policies in Turkey and across the world are continuing. The aim of this study is to measure the efficiency of regional investment incentives system on employment is being implemented in Turkey since 2012. The study primarily gives general information about incentives. Then, developments in the incentive system in Turkey from 1913 to present were explained in detail. In order to see developments in other countries, the incentive policies in Germany, China, Italy and Poland are examined. In this study, Data Envelopment Analysis which is used to measure efficiency was explained. Other studies on the same subject in Turkey were reviewed. The evaluation of the current regional incentive system is carried out with the help of Data Envelopment Analysis. In this analysis, the current incentive system is compared to the incentive system implemented in 2009-2012 in terms of efficiency on employment. In this study, the expected number of employment and the expected investment amount as results of incentives are determined as inputs and the employment rate is determined as the output. The period of the study covers the years between 2009 and 2013. As a result of the analysis, it is concluded that the current incentive system does not create the expected effect in terms of employment increase. In the conclusion section, policy recommendations are offered to improve the existing incentive system.