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2015•Review of Urban and Regional Development StudiesRequires access

DYNAMICS OF REGIONAL NEW FIRM FORMATION IN TURKEY

Burhan Can Karahasan

Open publisher page 20 citations

Abstract

New firm formation is an important determinant of regional development. Entrepreneurial decisions on location choice are affected by numerous factors. Given the importance of local regional characteristics, this study focuses on the dynamics behind the regional formation of new firms in Turkey using balanced panel data from 1997 to 2006. An initial set of analyses underline the ongoing persistence of the unequal distribution of new firms. Among various factors, results obtained from different panel models suggest the importance of local demand, provincial business cycles, human capital development, and financial availabilities to explain the regional differences of new firm formation in Turkey. These results, which are robust to the inclusion of spatial links, also confirm that the proposed channels are common for manufacturing, services, and trade‐based production.

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What this paper is about

New firm formation is an important determinant of regional development. Entrepreneurial decisions on location choice are affected by numerous factors. Given the importance of local regional characteristics, this study focuses on the dynamics behind the regional formation of new firms in Turkey using balanced panel data from 1997 to 2006. An initial set of analyses underline the ongoing persistence of the unequal distribution of new firms. Among various factors, results obtained from different panel models suggest the importance of local demand, provincial business cycles, human capital development, and financial availabilities to explain the regional differences of new firm formation in Turkey. These results, which are robust to the inclusion of spatial links, also confirm that the proposed channels are common for manufacturing, services, and trade‐based production.

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Available abstract

New firm formation is an important determinant of regional development. Entrepreneurial decisions on location choice are affected by numerous factors. Given the importance of local regional characteristics, this study focuses on the dynamics behind the regional formation of new firms in Turkey using balanced panel data from 1997 to 2006. An initial set of analyses underline the ongoing persistence of the unequal distribution of new firms. Among various factors, results obtained from different panel models suggest the importance of local demand, provincial business cycles, human capital development, and financial availabilities to explain the regional differences of new firm formation in Turkey. These results, which are robust to the inclusion of spatial links, also confirm that the proposed channels are common for manufacturing, services, and trade‐based production.

Key concepts: Panel data, Economic geography, Distribution (mathematics), Dynamics (music), Production (economics), Economics, Regional development, Business

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