| Summary: | The aim of this study is to empirically investigate whether public capital is
provided optimally both at the national and regional levels in Turkey. Our
empirical work shows that public capital significantly contributes to the
production of private manufacturing sector. Nonetheless, the findings also
indicate that marginal productivity of public capital is smaller than that of private
capital, suggesting that public capital is over-provided at the national level. At
the regional level however, the picture is quite different. While public capital is
over-provided for the provinces with high performance in terms of income, it is
less-provided for the provinces with low performance. These results may be
taken to interpret that there exists no “efficiency vs. equality” trade-off for public
investment policy, and thus public investment as a regional policy ought to be
used for distributional (equality) purposes in Turkey
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