Convergence of Agricultural Sector, Non-Agricultural Sector, Public Expenditures and Migration in Turkey: A Spatial Panel Approach

Abstract

Purpose: The aim of this study is to investigate the spatial dimensions of the convergence process in the agricultural and non-agricultural sectors, public expenditures, and migration in 81 provinces of Turkey for the 2008-2018 period. Design/Methodology/Approach: For this purpose, spatial panel data estimation methodology with Driscoll-Kraay estimator is used to capture the effect of space, which is a necessary condition to prevent biased estimates of convergence. Findings: It is clear that structural problems in the agricultural sector restrict interaction with the non-agricultural sector in the provinces and this limits the convergence effect on the agricultural sector. Limited convergence in agricultural sector causes continued income gap between rich and poor provinces in Turkey. In addition to this, migration from the agricultural sector to the non-agricultural sector has an impact on the convergence of both sectors between provinces. Moreover, public expenditures appears to have no direct, indirect or total effect on both agriculture and non-agricultural sectors. Originality/Value: To the best of our knowledge, this study is the first to show the spatial dimensions of convergence at sectoral level for provinces of Turkey with relation to public expenditures and migration across agricultural and non-agricultural sectors.