Impact of transport investments on economic growth: The case of Turkey (1988-2017)

Investments in transport infrastructure have a crucial role in social, economic, cultural and military development of countries. Transport sector with 5 sub-sectors, is a factor that reduces the input costs in industry, agriculture and production. Accessibility between regions plays an important role in including unemployed labor force into economic activities. This dissertation investigates the extent of the role of the transport sector in the economy and the contributions of the transport investments to the Turkish economy. Growth and development theories are briefly discussed with in this study. The researches which study the relationship between transport investment and economic growth and development, especially in USA and Europe are also referred in this paper. Majority of these researches show that transport investment reduces the expenditure and improves the market and distribution network. Besides empirical evidence is given for the fact that transport investments improve productivity of economic activities and GDP. Although Turkey has been investing in this sector, compared to the transport network of the developed countries these investments are not sufficient enough. Statistics of cargo and passenger transportation in Turkey except airway passenger transport fall behind of the developed economies. Some progress achieved by recent arrangements in this sector, however specifically railway and land route network need to be developed further. Focusing only one transport system and disregarding others would be costly for Turkish economy. This study examines the correlation between GDP and the transport investments of Turkey within the period of 1988-2017. Granger Causality method is used to analyze this correlation and it is deducted that transport investments Granger-causes GDP.