This paper studies the spatial economic activity in Turkey and estimates the correlation between wages and consumer demand across NUTS1 regions of Turkey. First, simple market potential function is used to test whether closeness to larger markets has impact on wages. Second, Krugman (1993) economic geography model is estimated to see the agglomeration forces in Turkey. The results suggest that wages are higher in the regions close to larger markets and low trade costs and high share of expenditure on manufactured goods are the forces of agglomeration in Turkey.
Economic geography, market potential, regional disparities, Turkey. JEL Classification: F12, R12.