Factors Affecting Regional Distribution of Investments with Regional Incentives

Mestan G., Gülümser A. A.

21. Ulusal Bölge Bilimi ve Planlama Kongresi, Ankara, Turkey, 26 - 28 May 2022, pp.49

  • Publication Type: Conference Paper / Summary Text
  • City: Ankara
  • Country: Turkey
  • Page Numbers: pp.49
  • Istanbul Technical University Affiliated: Yes



In the mainstream and parallel economic schools, it was argued that the most effective way of development of underdeveloped regions was to attract investment to these regions. In short, the key to development was considered to be the accumulation of physical capital. However, after a long time, the supporters of the endogenous growth school and parallel schools have put forward that various factors such as human capital, technology, socio-economic development are more effective than physical capital in the development of underdeveloped regions. Today, governments still consider the most important way of regional development as attracting investment. For this purpose investment incentives are one of the most important policy instruments used by governments to ensure regional development. The main purpose of the regional incentive practice developed within the investment incentive system is to reduce interregional inequality by giving more incentives to less developed regions. In Turkey, it is also aimed to attract investment to underdeveloped regions in order to eliminate interregional inequalities and ensure the development of underdeveloped regions. For this purpose, the regional investment incentive system was introduced in 2009. In the regional incentive system of Turkey, provinces are divided into 6 levels. The most developed provinces are included in the first level, and these provinces are given the lowest incentives. In the sixth level, there are underdeveloped provinces (eastern provinces) and it is aimed to attract investment by giving the highest level of incentives to these provinces. In this context, the aim of this study is to evaluate Turkey's regional incentive policy and effectiveness by determining the factors that affect the distribution of regional incentive investments. In the study, socio-economic factors that are effective in the distribution of regional incentive investments at the NUTS 3 level will be analyzed by empirical analysis method. As a result of the empirical analysis, it is expected that the socio-economic development level of the region significantly affects the amount of incentive investment in that region.

Keywords: Regional Incentive System, Investment Incentives, Incentive Politics.