The econometrical analysis of the relationship between urbanisation and economic growth (the case of eu countries and turkey)

The aim of this study is to determine whether there is a relationship between urbanisation and economic growth in terms of 13 European Union Member countries and of Turkey as well as to determine the direction of this relationship, if it exists. In the study, GDP per capita was used as a dependant variable where population density and employment rates of industry and services sectors, which represent the urbanisation, as well as the employment rate of agriculture sector and general employment rate, which were included in our model, were used as independent variables. The annual series of the variables of the model that was created within the scope of the study for the period between 1990-2014 were analysed by panel co-integration method. According to panel causality test, there is a bilateral causality relationship between GDP and employment rates of services, industry, and agriculture sectors. Additionally, there was a unilateral causality relationship from GDP towards urban population density and towards general employment rate. Also, according to the DOLS and FMOLS results, the increases in urban population density and in the employment rate of services sector have a positive effect on GDP per capita. Findings from the study show that urbanisation and economic growth are mutually dependent processes in 13 EU member countries and in Turkey.