Transport infrastructure and regional growth: Case of the Turkish regions

The economic effects of transport infrastructure on economics have been attracting a great deal of attention both from policy makers and researchers since the pioneering works of Aschauer in the late 1980s. From the policy makers' point of view, the provision of infrastructure, which generates positive externalities and promotes the productivity of firms, is an important policy tool for promoting regional growth and reducing regional disparities. For this reason, Turkey has invested in transportation infrastructure to diminish the regional economic inequalities since the early 1960s. However, this serious change in the transport infrastructure stock has captured little attention in the literature. To our knowledge, this study is the first attempt to measure the latest developments of transportation infrastructure in twenty-six NUTS 2 regions in Turkey with a spatial perspective. The aim of this study is to examine spatial effects of public transportation infrastructure investments on regional economic growth. We employ a Cobb-Douglas production function model, and estimate the model with spatial panel model. The novelty of this study lies on selecting the most appropriate spatial weight matrix for detecting the spatial effects more accurate. We create 11 different spatial weight matrices pertaining to each year for the period 2004-2014, which reflect the change over time, to capture the impacts of recently built-up roads or extension the existing ones on regional economic growth. The results show that infrastructure investment has significant and positive spillover effect on regional growth and employing multiple spatial weight matrices matters for obtaining the significant and accurate findings.