Abstract:

In this study, the effects of agglomeration economies and growth of neighbours on regional income disparities are investigated by testing two challinging hypotheses (“spread effect” and “backwash effect”). Initially, Herfindahl Index, Gini Coefficient and Location Quotient are calculated for Turkish manufacturing industries in each province by using the production, value added and employment data; then Beta convergence analysis is done by panel data estimation. Estimation results for 73 provinces reveal that income disparities decrease by time, agglomeration slows down convergence process while growth of neighbours promotes convergence. When the Beta analyses are repeated for relatively more homogeneous 7 regions, agglomeration is found to influence convergence positively

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