B. Can KARAHASAN

Dynamics and Variation of Regional Firm Formation - Case of Turkey

2010

(Supervisor: A. Suut Doğruel)

ABSTRACT

This dissertation aims to scrutinize the regional inequalities in Turkey from the view point of location choice of production. Location choice of production, measured by the number of new firms in different industries, is examined and its variation is explained by focusing on the social and economical properties of provinces. Theoretical insights offered by new economics of geography as well as contemporary discussion of knowledge based entrepreneurial models are used. Preliminary results about the variation of new firm start ups indicate that location choice of production is unequal among the geography of Turkey. The unequal dispersion of firm formation is linked with the regional differences via different panel data models. Overall findings of the dissertation confirm that local demand, financial development and human capital quality act as pull effects for the location choice of production. Meanwhile additional findings indicate that industrial interactions are not existent, that the firms in specific industries prefer to locate close to same industries. Finally further impact of spatial autocorrelation as well as role of geography is observed. Results validate that there is increasing spatial heterogeneity in location choice of production; leaving developed provinces more developed and less developed provinces less developed in terms of firm formation. This finding is also confirmed by investigation of the role of geography; that production prefers to locate in high market access areas of the western geography of Turkey. In general results of the dissertation pinpoints that, dispersion of the location choice of production is unequal among the provinces of Turkey and this dispersed picture shares the common pattern realized in regional inequalities in Turkey.