ABSTRACT
Regional divergence and unfair income distribution are substantial problems of the Turkish economy. Turkey has a long history of interventionist economic policies that prioritize either public or private (or both) sector incentives to close the regional gap however no success has been achieved yet. While the empirical literature on impacts of trade on economic growth provides evidence of positive welfare effects (not necessarily distributional though), trade increase can be achieved through spatial and/or non-spatial factors. This study searches for the impacts of trade on the regional per capita income gap in Turkey without focusing on trade-boosting factors. In the analyses, trade is grouped into industry-based inter-regional trade and regional industrial exports, and the input-output matrix of the year 2010 is utilized. Empirical findings suggest that inter-regional trade and exports in textile products and transport equipment industry closes per capita income gap and it does not matter from which region the exports are sourced and among which regions the trade takes place. Exports and inter-regional trade in other industries create a positive impact only for some regions. To conclude, the study provides information regarding which industries and in which regions the domestic and exports of particular industries should be promoted.
