Impacts of Eu Pre-Accession Funds on Regional Growth in Turkiye: A Spatial Analysis

Abstract

This thesis aims to investigate the influence of Instrument for pre-Accession Assistance (IPA) funds, which is a part of its candidacy process for joining the European Union (EU), on the regional growth in Türkiye. Our study focuses on analyzing the economic growth impacts of these funds and their spatial dimension, considering their implementation through the decentralized implementation system (DIS) method.

As there is currently a dearth of empirical data on this subject, the aim of this study is two-fold. Firstly, our aim is to establish a comprehensive data set on EU pre-accession funds at regional level. Secondly, in order to close this gap, this thesis examines the effects of EU pre-accession, particularly IPA, funds on Türkiye's regional growth by using the established comprehensive data set. To our knowledge, it will be the first study to analyze the impacts of EU pre-accession funds on regional growth of Türkiye by using spatial econometrics techniques.

After conducting the required statistical selection processes, we apply spatiotemporal fixed-effect Spatial Durbin Model with log-transformed spatially-lagged variables to estimate the model. As far as our main explanatory variable, IPA funds is concerned, our estimation results point out that there is no statistically significant impact of IPA funds on the growth of the local economy. Our estimation results also address the other important determinants of regional growth in Türkiye.

Our results show that there is a pattern of conditional regional convergence, where regions having lower initial GDP points tend to experience more rapid economic growth, gradually catching up to regions with higher initial GDP levels. The coefficients of the employment rate as well as innovation variables are significantly positive in the model’s main estimation part, which shows the positive influence of an increase in employment and innovation on regional economic growth. Our findings also reveal that spatial interactions between provinces play a crucial part in economic growth and highlight the importance of spatial analysis.