Change in firm population and spatial variations: The case of Turkey



communication eliminating the transaction costs would bring not only a much more
diversificated market, but also much more differentiated products.

To define the spatial characteristics in these regions an explanatory model were developed.
For the change in total firm population, market size (population figures), the degree of
specialisation of firms in one manufacturing industry, the mean size of establishments are
the major causal factors affecting these changes in positive way, while the growth rate of
GDP per capita and the rate of manufacturing employment in total employment has negative
effect. However, the growth rate of population and the degree of specialisation of firms in
one manufacturing industry are the main explanatory variables in the change of micro firm
population.

In the explanation of the change in non-micro firms, rather than industrial production
characteristics employment structure seem to be more important, captured by the illiterate
and graduate rate of people in active population. The following two determinants are the rate
of manufacturing and agricultural employment in total employment. However, market size
and the degree of specialisation of employment in one manufacturing industry have slight
effects on the change of non-micro firm population.

As the allocation of investment incentives are not implemented by a sectoral or regional
viewpoint, they do not affect the growth in firm population as discussed other studies.
However, for the continuing policy of establishment of small industrial estates or organised
industrial zones there is no serious study showing their structure or the markets they produce
for -domestic or foreign markets-, etc. Although they provide some spatial advantages like
infrastructure, according to the results of regression analysis they do not seem to have any
effect on the change in the firm population.

However, this study is limited to the manufacturing sector only. Although it provides some
insights on the relationship between firm growth and spatial characteristics of the regions, to
outline the whole structure of the economy the need of other sectoral studies is very obvious,
especially for the service sector.

17



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