Club Convergence: Do public investments play a role in regional income per capita convergence in Turkey?

Abstract

This paper investigates club convergence in real GDP per capita in NUTS 2 level at Turkey from 2005 to 2019 by using Phillips and Sul (2009, 2007) procedure. After determining the initial clubs, to seek merging clubs we perform Phillips and Sul (2009) and Lyncker and Thoennessen (2017) procedure. As a result, we find 7 convergence clubs and one divergent club following Phillips and Sul (2009, 2007) and we don’t find any merging clubs following Phillips and Sul (2009) and Lyncker and Thoennessen (2017) procedure. After determining the convergence and merging clubs, this paper also scrutinizes the dynamic effects of public capital on regional convergence employing system generalized method-of-moments (System GMM) estimators. It has been concluded that from System GMM results, share of public investments in GDP do not have a significant role as a determinant of any clubs.