Political Economy of Regional Development: Political Pluralism and Investment Relationship

Public and private fixed capital investments are vital dynamics of the regional economic growth. Therefore, the potential determinants of regional allocations of public and private investments must be investigated to establish persistent and balanced regional development. One of them is political pluralism. This study includes analysis of the relationship between political pluralism and regional allocation of public and private investments and also regional economic growth. For this purpose, Fixed Effects Panel Model on which analyzed 26 NUTS-II Regions over 2008-2011 period was established by using Herfindahl-Hirschman Index which created by vote ratios of political parties in 2007 and 2011 Parliamentary Elections. The findings of the model show that political polarization has positive effects on public and private investments and it is important determinant of regional development. Also, literacy and manufacturing rates effects regional growth positively through positive externalities on investments.