Regional Income Disparity in Turkey: Turning Losers (Sirnak) into Winners

There are large differences in living standards among regions in Turkey.

Şırnak
By Arzu Karaarslan
Dağ Media Economy Writer 
https://twitter.com/ArzuKaraarslan
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In 2001 the average living standard in Turkey’s richest regions, (the TR42 Region consisting of Kocaeli, Sakarya, Duzce, Bolu, Yalova), was roughly six times larger than the living standard in Turkey’s poorest region, (the TRA2 Region consisting of Agri, Kars, Igdir, Ardahan). The difference in living standards between the richest and poorest regions in Turkey is actually bigger than Turkey’s gap with Europe.

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In this article I will examine the development of Şırnak, one of Turkey’s poorest and most disadvantaged cities. My purpose will be to highlight which factors contribute to Sirnak’s being less developed compared to other Turkish regions, and to examine what is being done to in Sirnak and other poor regions to catch up with the rest of Turkey. Eliminating poverty in Sirnak is a matter of importance to all Turkish citizens, not just the residents of Şırnak. Regional inequalities are not a trivial matter; they are source of social unrest, possibly leading to civil war.

 

Unequal economic development across regions is not a consequence of national policy. Instead, interregional income disparities are the result of differences in geography, demography, and infrastructure. Geography, location and infrastructure importantly influence the cost of transporting goods into and out of a location. Mountainous regions with few roads and bridges tend to be poorer and characterized by low tech traditional industries due to the high cost of moving goods and services. Political instability at the regional level as well as security are other factors that give rise to different regional development paths by curtailing private investment. Other factors that contribute to regional income differences are skills and education of workers. Often, the skills of workers are not those needed by potential entrepreneurs. Additionally, differences in institutions particularly as they affect the amount of bureaucratic red tape to start up a business have been found to be critical in understanding income differences. .

So what ails Sirnak? Sirnak is Turkey’s youngest province with 65 percent of its population being less than 25 years in age. In terms of location, Sirnak has the advantage of bordering both Iraq and Syria. For this reason, its volume of international trade is quiet large. It is the 16th largest exporter among the Turkish provinces with 1 Million 106 billion Dollars in export in 2012a. Habur Boarder Gate which is one of the largest gates in Turkey is located in Sirnak. However; despite these locational advantages, according to a survey conducted by Sirnak University 95 percent of goods that exported from Sirnak are produced in other cities of country.

In terms of other factors relating to human capital, and physical capital, Sirnak ranks poorly compared to other regions. According to the Socio- Economic Development Index computed by the Ministry of Development Sirnak is ranked 78th city among 81 cities in 2011. Socio- Economic Development Index contains 61 indicators that cover demography, education, health, employment, competition, innovative capacity, financial capacity, life quality, and accessibility. The literacy rate of Sirnak is 85.9 percent which falls short of the national average of 92.3 percent. The number of doctors per one hundred thousand people in Sirnak is 41, less than half the national average. In terms of social security 48 percent of the population is included in the green card system this number is 12 percent in Turkey. Although public spending has been increased in recent year, it is still below the national average (in per capita terms).

Interregional inequality is not specific to Sirnak; there are huge gaps between eastern and western regions in terms of development indicators. As in these other regions, the national government has taken several measures to try to close the gaps. One of the crucial policies was creating development agencies; institutions mainly aimed at eliminating interregional imbalances by strategic planning and coordinating the public, private and nongovernmental organizations activities. These agencies plan and execute grant schemes for SME’s, public institutions, local governments and NGO’s. They also provide technical assistance and guidance to investors. Another policy tool that has only recently been put in place is an incentive system for private sector investments in Sirnak. These incentives include exceptions from VAT and custom duties, reduced tax rates, social security premium support (Employer’s Share), free land allocations for investments, interest rate subsidies, and an income tax withholding allowance. Another key step in fostering economic development in Sirnak is in the area of security. Currently, there is peace process going which is expected to take some time. A secure environment is essential to outside investors, who are expected to play an integral role in Sirnak’s growth.

 

Differences in livings standards among Turkish regions are significant, but they are not as large as the differences that exist between the world’s richest and poorest nations. If we have learned anything about development in the last 50 years is that rapid catch-up is possible. Poor regions and countries have an inherent advantage with being less developed as labor costs tend to be lower there, attracting entrepreneurs to set up production facilities. However, for this to happen a secure environment with a politically stable government that provides the necessary physical infrastructure and education system and does not impose unjustified constrains on entrepreneurs is what is needed both at the regional and national level in Turkey.

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