Spatial effects of industrial concentration on regional income in Türkiye

In this study, we analyse the spatial effects of sectoral concentration on regional income across 81 provinces in Türkiye using the Spatial Durbin Model (SDM). The results reveal strong spatial dependence and significant spillover effects between regions. An inverted-U relationship is identified, where sectoral concentration initially increases income but yields diminishing returns beyond a threshold. The linear term is positive and significant, while the quadratic term is negative. Firm-level electricity consumption is found to have negative and significant direct and indirect effects, indicating cost pressures rather than productivity gains. Population density shows no significant direct effect; however, its indirect impact is positive and strong. Exports positively and significantly affect income in both direct and spillover dimensions. Overall, regional income is shaped by sectoral concentration structures and spatial interactions, highlighting the importance of incorporating spillover mechanisms into policy design and regional development strategies.