The impact of human capital on regional economic growth in the perspective of new economic geography: An empricial analysis

New Economic Geography is a discipline that takes spatial relationships, increasing returns and incomplete competition into account in its attempt to figure out the reasons for agglomerations while explicating economic differences among regions. The term was coined by Krugman in the early 1990's, which became more influential in the early 2000 and it finally became the main theme of 2009 World Development Report. Human capital, on the other hand, is another term that has gained significance in literature thanks to the changes in the production processes, as the factor of labor has had less to do with muscle power, and more to do with the ability to transform know-how into production. In this context, the focal point of this thesis is the effect of human capital on the regional development, within the frame of New Economic Geography. The thesis uses a 2007-2015 data-set that covers 26 regions according to level 2 of Nomenclature of Territorial Units for Statistics (NUTS). The data was gathered from Turkish Statistical Institute. The analysis was performed with panel data analysis. The first chapter of the thesis provides an introduction to the New Economic Geography, as well as to various geographical models based on its theory. The second chapter analyzes the concept of human capital and the Human Capital Index published by the World Bank. The third chapter of empirical analysis attempts to define the variables that affect gross domestic product (GDP) of 26 regions of Turkey in NUTS-level 2. Accordingly, the thesis finds GDP to be in a positive and significant relationship with high school graduation rate, urbanization rate and wages; whereas GDP is found to be in a significant and negative relationship with unemployment rate and dummy variable as an life index.