Abstract:

The development differences between the regions reveal the problem of regional income inequality. In terms of the neoclassical growth model, income differentials are a short-term phenomenon and will disappear in the long run. According to this approach, which is called the convergence hypothesis, the relatively poor regions will grow faster than the rich regions due to the decreasing marginal productivity of capital and the per capita income of the two regions will equalize. This process, initially referred to by the neoclassicals as absolute convergence, has found little support in the empirical literature. On the other hand, there is a lot of evidence for club convergence pointing to multiple equilibria between regions in the analyzes made considering the initial conditions and structural features. In this study, the convergence process of the per capita income of the regions was analyzed with the club convergence technique developed by Phillips and Sul (2007, 2009) for 26 NUTS-2 regions in Turkey during the 2004-2020 period. The results show that although there is no general convergence in our country, there are 5 convergence clubs. The study also evaluated the average growth rates of the regions that make up each club and sector contributions to this growth. Thus, it has been determined that the similarity in the sectoral structures of the regions is an effective factor in the formation of clubs.

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