Infrastructure, Entrepreneurship, and the Export Paradox: A Panel Data Analysis of Regional Income Divergence in Turkish Economy
Türkiye’s regional income gap is large and persistent. In 2023, the richest province earned roughly 4.6 times the per-capita income of the poorest. Yet whether trade, entrepreneurship, or infrastructure drive this divergence - and how stable these associations are across macroeconomic regimes - remains empirically unsettled. This paper addresses those questions using a balanced panel of 81 provinces over 2013–2023 (N = 890, T = 11). The empirical strategy proceeds in five steps: Pesaran (2021) cross-section dependence (CD) tests; Pesaran (2007) second-generation CIPS unit root tests; Theil T decomposition with between–within splitting; two-way fixed-effects (2W-FE) regression with HC1 robust errors; and a first-difference specification with year effects as the main robustness check. A supplementary beta-convergence regression and spatial autocorrelation analysis are also reported.
Three findings stand out. First, infrastructure - proxied by electricity consumption per capita - is the most consistently significant conditional correlate of provincial income (2W-FE: β = 0.132, p < 0.001; first-difference: β = 0.109, p < 0.001). Second, export intensity is negatively and significantly associated with income when measured as the log export-to-income ratio (β = −0.013, p < 0.001), a pattern concentrated in the pre-2018 sub-period and in Eastern provinces. Third, beta-convergence analysis reveals a statistically significant but slow convergence rate of 0.89% per year (half-life: 78 years), masking considerable heterogeneity: convergence is faster in the post-2018 period and absent in the pre-crisis years. Spatial autocorrelation in provincial income is high (average Moran’s I = 0.67, p < 0.01 in all 10 observed years), confirming that income clustering is structural and geographically persistent. All reported associations are conditional correlates, not causal estimates.
Copyright© 2026 The Author(s). This article is distributed under the terms of the license CC-BY 4.0., which permits any further distribution in any medium, provided the original work is properly cited.
Article’s History: Received 9th of April, 2026; Revised 19th of May, 2026; Accepted 14th of June, 2026; Available online: 30th of June, 2026. Published as research article in the Volume XXI, Summer, Issue 3(93), June, 2026.
Şahin, M., Uysal Şahin, Ö., Aliyev, S., & Bagirova, I. (2026). Infrastructure, Entrepreneurship, and the Export Paradox: A Panel Data Analysis of Regional Income Divergence in Turkish Economy. Journal of Applied Economic Sciences, Volume XXI, Summer, 3(93), 1015 – 1029. https://doi.org/10.57017/jaes.v21.3(93).17
Acknowledgments / Funding: The authors received no external funding for this study.
Conflict of Interest Statement: The authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.
Data Availability Statement: Provincial data are publicly available from the Turkish Statistical Institute (TÜİK) at https://data.tuik.gov.tr. The linked GDP deflator series (NY.GDP.DEFL.ZS.AD) is openly available from the World Bank at https://data.worldbank.org. Replication code is available from the corresponding author upon reasonable request.
Ethical Approval Statement: This study is based exclusively on the analysis of publicly available, aggregated administrative statistics from the Turkish Statistical Institute (TÜİK). No human participants, personal data, or animal subjects were involved. Therefore, ethical approval was not required.
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