Manufacturing and Regional Economic Growth in Turkey: A Spatial Econometric View of Kaldor's Laws

In this paper, the regional economic growth process of Turkey during the period 1990-2000 is analysed within the context of Kaldor's laws. The validity of Kaldor's three growth laws is empirically tested by spatial econometric methods as well as traditional econometric method. The empirical results reported in this paper demonstrate the validity of the laws for Turkey over the period under discussion. In testing the first law, spatial dependence is detected. The presence of spatial dependence indicates that the growth of neighbouring regions (and indirectly, the growth of their manufacturing sectors) has an effect on the growth of a region. All the empirical findings suggest that manufacturing has a key role in regional economic growth.