RELATIONSHIPS BETWEEN INVESTMENT INCENTIVES, PUBLIC INVESTMENT EXPENDITURES AND EXPORT: PANEL CAUSALITY ANALYSIS ON PROVINCES IN TURKEY

The state plays an essential role in the survival of companies under today's global competition conditions. Governments can, directly and indirectly, affect the competitiveness of firms through incentives and public investment expenditures. This study examines the relations between investment incentives, public investment expenditures and exports at the provincial level in Turkey. According to the panel causality analysis findings covering the period 2002-2017, there is a two-way causal relationship between investment incentives and exports. On the other hand, there is a one-way causality from exports to public investment expenditures. These results indicate the importance of the effects of incentives on exports in the short term. However, the absence of the expected export effects of public investments can be attributed to inefficiency in public investments.