Social capital and regional development in Turkey

This paper aims to improve the shortcomings of the empirical literature on regional social capital. The following three research questions are addressed: (i) do regional social capital and economic growth have an endoneous (circular) relationship as opposed to the exogenous one-way relationship assumed in the literature; (ii) What are the socio-economic and demographic determinants of cross-regional variation in social capital? And (iii) Are spatial spillovers relevant in the analysis of these questions? Empirically, we pursue the analysis for 81 Turkish provinces in 2015. Indeed, regional social capital in Turkey is far less studied than country-level social capital. The methodology adopted includes kernel density estimates, ordinary least squares, three stage least squares, and spatial error models. In terms of the obtained results, First, regional social capital is heterogenously distributed across regions. Second, social capital has no significant impact on economic growth but the growth induces the generation of social capital (in social norms). This represents a first result of reserve causality in the literature. Third, a typical province that has high social capital is the one with relatively high income, more even income distribution, low unemployment, big households and older age profile. Fourth, there is the evidence of spatial dependence that should be incorporated in empirical analyses.