Economic Impact of the COVID-19 Outbreak in Turkey: Analysis of Vulnerability and Resilience of Regions and Diversely Affected Economic Sectors

Abstract

The COVID-19 outbreak has deeply affected the global economy of most countries and Turkey is no exception. However, the impacts of the outbreak differ on a regional basis, and both scientists and policymakers have neglected this regional differentiation. In an attempt to redress this situation, our study aimed to reveal the regional disparities related to the economic impacts of the outbreak and the dynamics that created this differentiation in Turkey. Our statistical analyses were carried out based on two different periods. The first period covered the first trimester when the outbreak began, and several shutdowns were implemented. The second period covered the second trimester when society began to open up again. The first trimester was termed the shock period, and the second trimester the recovery period. We developed a resilient-vulnerability index based on selected variables such as employment, energy consumption, exports, and the number of companies established and closed using a location quotient (LQ) analysis. While our index offers a picture of resilient and vulnerable regions, we also used this index as a dependent variable in our study. In the second stage, we focused on what kinds of dynamics gave rise to the resilience or vulnerability of a region. Our findings revealed that regions are economically affected by the outbreak at different levels. The regression analysis results showed that the innovation capacity and export levels of the regions predict regional resilience negatively, while firm size predicts positively. The recovery of regions also differed regionally. Our analyses show that Turkish regions with relatively larger economies recover more slowly, while regions with smaller economies recover more quickly.