THE EFFECTS OF AGGLOMERATION EXTERNALITIES ON SECTORAL EMPLOYMENT GROWTH IN TURKEY

Agglomeration economies are considered as the driving force behind the development of mega cities and large cities/regions, which are the most successful regions in world economy. According to “New Economic Geography” stream, externalities are approached as static and dynamic externalities. Dynamic externalities are classified as “Marshall (1891) – Arrow (1962) – Romer (1986, 1990) (MAR), Porter (1990) and Jacobs (1969)” by Glaeser et al. (1992). Dynamic externalities come out by the emergence of local knowledge and by strengthening communication among economic actors in the long term. Knowledge spillover also accelerates via strengthening of communication. This paper investigates whether agglomeration externalities affected regional growth in Turkey at the NUTS 3 level during the period 2010 – 2016 by using sectoral employment growth. The results of the study show that effect of MAR (Marshall–Arrow– Romer) externalities is found to be negative as they are in the studies done through the data of most of the countries. It is concluded that unrelated variety (JACOBS) has no effect on employment growth. Coefficients in most of the sectors are seen to be positive in PORTER externalities.