Does income converge in Turkey? An empirical assessment

Abstract

Turkey has recorded high growth rates during last two decades that have led to a structural change in the income level of the provinces. This shift arises to the question of whether the regional disparities in Turkey converge or diverge. The growth performance of Turkey has also led to change the structure of the economy which results in the move from rural areas to urban areas. The empirical examination of the income convergence in Turkey thereby seems to be timely and important in order to provide insights for analyzing the causes and consequences of regional disparities and connecting a link between economic growth and urbanization. We collect the per capita income data of 73 provinces during the period 1992- 2013 and estimate different econometric models by controlling for structural changes in the income. The results overall provide an evidence on the income divergence between the east and west of Turkey. We discuss why Turkish urbanization which is in tandem with economic development process is not a stand-alone for the convergence and discover that the region-specific structural characteristics (the geographical conditions, the terrorist incidents, the regional investment policies, and the horizontal imbalances) seem to be still prevailing.