Spillover effects of sectoral and regional clusters in manufacturing industry of Turkey

Large regional development disparities within nations and various reasons of which have been repaid quite attention under the title of ?New Economic Geography? by economists as well in recent years. Under the influences of multivariate factors, population and economic activities have concentrated / clustered within a few certain cities and urban regions of nations. The fact that as one of the vital factors that cause firms to cluster within a geographic region is that they tend to benefit from positive external economies has a widespread common acceptance by many economists today. In this work, exploiting the data from 25 manufacturing sectors classified based on ISIC REV 3 and 78 provinces of Turkey, first clustering coefficients of sectors and provinces for the variables of employment, value added and output via Hirschman-Herfindahl Index (HHI) are calculated for the years between 1997?2001. Clustering levels with regard to the three variables display significant discrepancies across sectors and provinces. Arising of larger clustering extent in some sectors and provinces relative to the others has made us to doubt about whether significant spillover effects have occurred in the relevant sectors and provinces. Therefore, employing multiple linear regression method, this study investigates whether significant spillovers in sectors and provinces due to the clustering have occurred. Clustering of employment in sectors in general does not cause positive spillover effects on value added and output levels of sectors. However, factors beyond clustering of employment have led significantly larger positive spillover effect on value added and output levels of particularly Printing and Publication sector relative to the other sectors. Clustering of employment in provinces overall brings about significant positive spillover effect on value added levels of them, whereas it does not have such a significant impact on output levels of provinces. On the other hand, factors beyond clustering of employment in provinces have greater significant positive spillover effects especially on value added levels of İstanbul and Kocaeli, and on output levels of İstanbul, İzmir ve Kocaeli relative to that of other provinces.Key Words: Sectoral Concentration / Clusters, Regional Concentration / Clusters, Industrial Clusters, Externalities / Spillovers.