An Empirical Analysis of the Determinants of Regional Growth: The Case of Turkey

Since the beginning of economic literature, growth has been a key indicator of successful economic performance. Despite this consensus, discussions continue about which policies should be implemented for permanent growth. In particular, technological development stands out as the main explanatory factor in the analysis of economic growth, and according to endogenous growth theories, technology is determined by the conscious activities of actors. In this direction, while the effect of skilled labor on growth gained importance over time, the role of openness in creating technological externalities and learning effects has been another focus in the literature. Although these theories are tested empirically mostly on the basis of countries, the differences between the growth rates of the regions within the same country can directly affect the increase in total within the country. Hence, it would be useful to consider regional differences in order to propose the correct policies for high growth rates. For this purpose, in this study, impact of foreign trade and human capital on growth in 20 NUTS 2 regions between 2013 and 2020, will be examined using panel data analysis. The data used in the study were obtained from the TURKSTAT regional statistics database. As a result of the study, both trade openness and skilled workforce are found to increase regional growth. In this respect, policies such as providing investment and tax incentives to reduce the difference in trade volumes between regions and allocating resources for education to eliminate regional inequalities are likely to increase national growth through regional growth.