Transportation-Communication Capital and Economic Growth: A VECM Analysis for Turkey

Eruygur A., Kaynak M., Mert M.

EUROPEAN PLANNING STUDIES, vol.20, no.2, pp.341-363, 2012 (Peer-Reviewed Journal) identifier identifier

  • Publication Type: Article / Article
  • Volume: 20 Issue: 2
  • Publication Date: 2012
  • Doi Number: 10.1080/09654313.2012.650901
  • Journal Indexes: Social Sciences Citation Index, Scopus
  • Page Numbers: pp.341-363


This paper analyses the short- and long-term relationships between the transportation-communication capital and the output for Turkey. The study applies a Cobb-Douglas production function under the assumption of constant returns to scale and employs co-integration analysis by estimating a vector error correction model (VECM). As a result of the VECM estimation, one co-integrating relationship is detected. The results based on the impulse response function analysis imply that per labour transportation-communication capital appears both to have been a crucial input in the Turkish productive process and to have had a positive crowding in effect on the per labour non-residential total capital formation. Moreover, the results support the argument that the transportation-communication capital has a lagged impact on economic growth. The long-term accumulated elasticity of output to transportation-communication capital has been found to be 0.59. The long-term accumulated marginal product was also calculated. It implies that a 1 Turkish Lira increase in per labour transportation-communication capital results in a long-term rise of 1.45 Turkish Liras in per labour output. All these findings suggest that transportation-communication capital may be a powerful tool for policy-makers to promote long-term per labour real output growth in Turkey.