Institional structure and local economic development: A field research on Erzurum and Batman

With the local economic development (LED) process replacing traditional development approaches, institution and institutional structure has become the focus of attention and this has a great place in economic growth and development literature from the nineties years. Thus, both academicians and policy makers have done theoretical and practical research on the subject. In general meaning, although there is no consensus on which region the institutional structure will be effective in these researches, effects of institutional structure on development has been detected positively. The purpose of this study is also to examine the effects of institutional structure on LED process of Erzurum and Batman provinces which are relatively less developed in Turkey. In this framework, descriptive and econometric analyses have been based on 810 surveys conducted in both cities. According to the results of the analysis, in the estimated models for Erzurum, when the coefficients of meaningful variables are collected, according to LED, the three most influential variables respectively are; voice and accountability, regulatory quality and government effectiveness. Despite that in models predicted for Batman, the three most effective variables control of corruption, rule of law and government effectiveness are observed. In brief, in terms of LED indicators, it was determined that institutional structure positively affected LED by economic, social, cultural and political channels for Erzurum and Batman, which are relatively less developed cities in Turkey. Keywords: Institution, Institutional Structure, Local Economic Development, Batman, Erzurum