An Empirical Investigation on Regional Disparities in Public Expenditures: Province Level Evidence from Turkey

This study investigates the existence of convergence in public-expenditures and its nine different sub-categories to reveal regional disparities in Turkey. To this end, we employ a club convergence analysis proposed by Phillips and Sul (in Econometrica 75(6):1771-1855, 2007) for 81 provinces of Turkey over the period between 2004 and 2018. The findings show that (i) except for social and environmental protection expenditures, total public expenditures and its seven sub-categories have multiple equilibria; (ii) there are major disparities across regions, especially between the eastern and western regions; (iii) spendings on education, health, and economic affairs expenditures might pose serious challenges for long-term development; (iv) expenditures on defense and economic affairs are the most important components of multiple equilibria found in total public expenditures. The existence of club convergence and the distribution of provinces across clubs propose some important policies which might help policymakers to reduce regional disparities amongst provinces.