Abstract
This work investigates convergence among regions of Turkey with neoclassical exogenous growth perspective. According to results, it can be stated that there is a tendency of convergence among the regions of Turkey. However, there is an important crisis (2008 crisis) in the investigation period of this study in which the tendency of convergence increases. Besides, descriptive statistics show that during the crisis, the speed of convergence increases, however, apart from crisis and post-crisis, excess capacity periods it is impossible to state that there is convergence among regions of Turkey. On the other side, descriptive statistics show that periods without economic crisis also do not indicate divergence. Therefore, it cannot be stated that there is divergence or convergence among regions of Turkey for the investigation period of this study but the main conclusion is that crisis has a positive impact with respect to closing income differences among regions.
Highlights
IntroductionThe pioneer study for convergence belongs to Solow (1956)
On theoretical ground, the pioneer study for convergence belongs to Solow (1956)
Fixed-effects regression method is used as Hausman test consistently suggests as the analysis is made for the regions of Turkey and all the parts are used so that what need to be focused on is the within variation
Summary
The pioneer study for convergence belongs to Solow (1956). In his theory of neoclassical growth, there will be convergence among all economies towards balanced growth paths because of the assumption of decreasing return to scale to capital. Neoclassical models starting with Solow (1956) can be called exogenous technology growth models since they treat technology as an exogenous factor. Technology finds itself in Total Factor Productivity (TFP), in other words, Solow residual in neoclassical models. TFP is the unexplained part of the economic growth which is not related with capital or labor. What is left after subtracting the share of capital and labor from output is TFP
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