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Can Market Potential Explain Regional Disparities in Developing Countries? Evidence from Turkey

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  • Burhan Can Karahasan
  • Fatma Dogruel
  • Ali Suut Dogruel

Abstract

type="main"> Regional disparity is one of the important characteristics of the Turkish economy. This study examines the impact of market potential on the regional differences in Turkey by investigating wages in the manufacturing industry for 1987 and 2000. Evidence suggests that market potential is an important determinant of inequality in Turkey. In addition, public–private decomposition reshapes the dispersion of wages supportive of rising heterogeneity in the private manufacturing industry. This increases the explanatory power of market potential, which is observed to be high in western Turkey and diminishes toward eastern Turkey. Our findings highlight that during the postliberalization era of the 1980s, Turkey's regional inequality concern transformed into a structural problem which can be explained by provincial market potential. Moreover, our results underline that the modern geography framework, which has been tested for developed economies, is able to elucidate the regional differences in a developing country suffering from persistent imbalances.

Suggested Citation

  • Burhan Can Karahasan & Fatma Dogruel & Ali Suut Dogruel, 2016. "Can Market Potential Explain Regional Disparities in Developing Countries? Evidence from Turkey," The Developing Economies, Institute of Developing Economies, vol. 54(2), pages 162-197, June.
    • Handle: RePEc:bla:deveco:v:54:y:2016:i:2:p:162-197
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    File URL: http://hdl.handle.net/10.1111/deve.12105
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    Cited by:

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    3. Burhan Can Karahasan, 2020. "Can neighbor regions shape club convergence? Spatial Markov chain analysis for Turkey," Letters in Spatial and Resource Sciences, Springer, vol. 13(2), pages 117-131, August.
    4. Gabrielle Gambuli, 2023. "Navigating the Geography of Regional Disparities: Market Access and the Core-Periphery Divide," THEMA Working Papers 2023-05, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    5. Burhan Can Karahasan, 2020. "Winners and losers of rapid growth in Turkey: Analysis of the spatial variability of convergence," Papers in Regional Science, Wiley Blackwell, vol. 99(3), pages 603-644, June.
    6. Burhan Can Karahasan & Firat Bilgel, 2018. "Economic Geography, Growth Dynamics and Human Capital Accumulation in Turkey: Evidence from Regional and Micro Data," Working Papers 1233, Economic Research Forum, revised 10 Oct 2018.
    7. Fatma Doğruel & Ali Suut Doğruel, 2020. "Regional Wage, Productivity Differences and Location Choice of Manufacturing Sector in Turkey," Yildiz Social Science Review, Yildiz Technical University, vol. 6(1), pages 1-16.
    8. Duran, Hasan Engin, 2019. "Asymmetries in regional development: Does TFP or capital accumulation matter for spatial inequalities?," The Journal of Economic Asymmetries, Elsevier, vol. 20(C).

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