Related variety in sectoral growth in Western Anatolia

The purpose of this thesis is to examine the existence of agglomeration economies (external economies) in Western Anatolian region of Turkey and the impact of agglomeration economies on regional growth in this area. For this purpose, employment growth, productivity growth and GDP per capita growth of cities are used as indicators of economic growth. In the analysis, the data which is designed for Turkey?s 35 most developed cities that are concentrated in Western Anatolia in the four-digit level of ISIC Revize.3 manufacturing industry (international industrial classification) is covering the years 1992-2001; also, GMM (Generalized Method of Moments) dynamic panel analysis methods are applied that is proposed by Arellano and Bond(1991).In addition to examining the impact of the agglomeration economies on cities growth, the difference of this dissertation from other studies in the literature is that it distinguished industrial diversity/ variety (Jacobs externalities) as related variety and unrelated variety.According to regression results, although MAR, Porter and Jacobs externalities have positive effect on employment growth, the effect of MAR and Porter externalities have been decreasing while the effect of Jacobs externalities (related variety) have been increasing over time. Regarding the productivity growth, the positive effect of MAR externalities and urbanization economies are founded; moreover, wage growth investment growth has positive effect on productivity growth. The only long-term positive impact of urbanization economies is found for gross domestic product per capita growth. In addition, historical and dynamic conditions of the cities should play an effective role in agglomerations and externalities as well as growth of cities. As a result, historical structure and aim of the policy should be taken into consideration while determining the regional policy of cities as well as the effects of externalities should not be forgotten.