Spatial Agglomeration, Innovation Clustering and Firm Performances in Turkey

This chapter investigates how firms’ productivity in Turkey is affected at spatial level by agglomeration of firms, clustering of innovation and localization of foreign direct investment (FDI). According to the Marshall theory, specialization economies increase the interaction between firms and workers, and speed up the process of innovation and growth, as firm agglomeration in the same sector produces positive externalities and facilitates the growth of all manufacturing units within it. FDI is found to be an important channel for transfer of technology and the modern, advanced technologies introduced by multinational firms can diffuse to domestic firms through spillovers. One of the first attempts to identify the effects of regional agglomeration was made by E. Taymaz and G. Saatci. Polarization of activities was confirmed to be an enhancing factor of firm performance. A model of development based on strong polarization is confirmed to be enhancing in most cases firm performance and growth