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Regional Inequality and International Trade in Turkey: A Dynamic Spatial Panel Approach [ITU J Faculty Arch]
ITU J Faculty Arch. 2017; 14(3): 25-39 | DOI: 10.5505/itujfa.2017.24633  

Regional Inequality and International Trade in Turkey: A Dynamic Spatial Panel Approach

Hasan Engin Duran1, Umut Erdem2
1Assistant Professor of Economics, Izmir Institute of Technology, City and Regional Planning Department, İzmir-Turkey
2Research Assistant, Dokuz Eylül University, Department of City and Regional Planning, İzmir-Turkey

Aim of the present article is to investigate the impact of trade liberalization on the evolution of regional income inequalities in Turkey between 2004-2011. Despite the large body of literature on this subject, there exists several directions which needs to be further explored. i. so far in the literature, the consept of trade openess is too broadly defined. However, it is not only ‘trade’ per se that can affect the regional economies but the composition of trade is also of great importance (Rodriquez-Pose and Gill, 2006). Indeed, it can be partitioned into two components, such as exports and imports. We analyze separately the impact of each component on the evolution of regional inequalities. ii. in most of the empirical studies dealing with this issue, neighbouring regions are assumed to have no spatial economic interconnection between each other. We, therefore, incorporate spatial spillovers of trade and growth into our analysis. Our results are summarized in two groups: First, regional inequalities in Turkey are quite sizable but tend to decline over the period of analyses. Second, initially poorer regions that experience an export-based liberalization tend to grow faster than richer ones. Imports, on the other hand, have an opposite effect.

Keywords: Regional Inequality, Spatial Panel Regression, Trade Liberalization.

Hasan Engin Duran, Umut Erdem. Regional Inequality and International Trade in Turkey: A Dynamic Spatial Panel Approach. ITU J Faculty Arch. 2017; 14(3): 25-39

Corresponding Author: Hasan Engin Duran, Türkiye

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