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An Empirical Investigation on the Interaction between Urbanisation Rate and Public Revenues and Expenditures in Türkiye
Chapter from the book:
Yılmaz,
E.
S.
(ed.)
2024.
Academic Research and Evaluations in the Field of Social Sciences-III.
Synopsis
With globalization, the rate of rural-urban migration and urbanization is increasing worldwide. As a result of this increase, the financial balances of countries can be affected. If this interaction is not well analyzed and managed, it can lead to structural problems such as inequality, inflation, poverty and unemployment, which are serious problems with multiplier effects in socioeconomic and political terms. In this study, the interaction between the rate of urbanization and the change in general budget revenues and expenditures in Türkiye for the period 1960-2022 is analyzed using time series methods. Accordingly, firstly, the stationarity of the series is investigated and structural break dates are determined. Then, causality relationships are investigated using Toda-Yamamoto (1995), Hacker-Hatemi J (2006) and Balcılar et al. (2010) tests. While the causality tests for the entire observation period reveal that there is a unidirectional relationship from the urbanization rate to public revenues and expenditures, the time-varying causality test developed by Balcılar et al. (2010) reveals that there is a causal relationship between the variables, although the periods differ, and that the causality relationships are sequential. In line with the findings, it has been determined that urbanization in Türkiye may be seen as a fiscal opportunity in certain periods due to its effects such as increasing the tax base, but in case of unhealthy / unplanned urbanization, urbanization may burden the budget in the medium and long term. In addition, it has been observed that changes in public revenues and expenditures can also cause the pace of urbanization in certain periods. Accordingly, it has been concluded that the urbanization process should be carefully monitored within the scope of fiscal policies, that in order to provide short-term revenues to the budget, the socioeconomic and political consequences of urbanization should be avoided in the medium-long term, such as zoning amnesty, unplanned sale of treasury lands and squatting, which would disrupt urban plans and increase instability, and that the aim of healthy progress of the urbanization process should be prioritized in current, investment and transfer expenditures.