@article{article_1235940, title={New firms and regional economic activity in Turkey}, journal={Ekonomi-tek}, volume={12}, pages={1–19}, year={2023}, author={Aksu, Yasin Enes and Karahasan, Burhan Can}, keywords={electricity consumption, employment, new firms}, abstract={New firms are important for local development as they create jobs and stimulate local demand. Meanwhile, firms’ location decisions are also affected by local demand and supply conditions. These potential links between firms’ location decisions and local economic conditions are theoretically discussed. However, strength of these channels over each other is less examined. We use monthly data (i.e., 2009-2021) to investigate the bi-directional relationships between new firms and regional economic activity in Turkey. Results from Panel VAR analyses confirm that new firms have strong effects on regional development which we measure by electricity consumption and employment. Moreover, our spatial extension shows that impact of new firms exceeds the administrative borders of regions. Contrariwise, the reverse case is less likely as economic activities’ impact on new firms is relatively weak. Our results validate that agglomeration of new firms have permanent positive effect on the level of economic activity in a region.}, number={1}, publisher={Türkiye Ekonomi Kurumu Vakfı}, organization={Tubitak}