geographic reasons, but these groupings do not correspond to official administrative divisions (World Bank (2023)).<sup>11</sup> In this subsection, we use one coarse sub-national classification. Provinces are grouped into three categories: developed, transition, and developing. These are categorized based on real GDP per capita in 2004 and coarsely capture the degree of remoteness, with the developed provinces closest to Western Europe, the provinces categorized as undergoing transition in the middle, and the provinces in Eastern Türkiye classified as being least developed.<sup>12</sup> We delineate years as being part of rebounds, expansions, and recessions based on Zürcher (2017, pg. 352) and World Bank (2019, pg. 23). We begin with official national accounts data from the Turkish Statistical Institute because they are the most consistent and systematic source of economic activity. Our objective is not to delineate and label these macroeconomic events, but rather to document contemporaneous changes across sectors and broad development categories.

Table 1 summarizes average growth rates in real per capita sectoral gross value added (GVA) and gross domestic product (GDP) for the period classification discussed above. We draw five conclusions that provide the macroeconomic context against which a reader may interpret results reported in the rest of the paper. First, our classification of periods in terms of rebounds, expansions, and recessions is consistent with the sectoral and aggregate GDP data. Second, over the course of 2004-2019 manufacturing and construction grew more quickly than agriculture and services across all levels of development. This is consistent with an overall trend towards greater urbanization.

Third, the construction sector was particularly sensitive to the business cycle, with pronounced pro-cyclical booms and busts in its gross value added (GVA). Fourth, the service sector grew by more than overall GDP during the recessions and by less during the expansions. Fifth, the two recessions involved smaller growth rates (or larger declines) for the developed provinces. The large decline in 2008/09 may be explained by the severe global recession. However, the 2018/19 recession involved larger declines in manufacturing and construction outside the developed 11 As a candidate country to join the European Union, Türkiye adopted the Nomenclature of Territorial Units for Statistics (NUTS) in its classification of geographic regions for statistical purposes (World Bank (2023). For that purpose, the country is divided into three regional levels. NUTS 1 divides the country into 12 regions. The 12 NUTS 1 regions are broken down into 26 smaller regions, the NUTS 2 regions.

12 All the regions were ranked according to their GDP per capita in 2004 by World Bank (2023). This regional development classification grouped provinces into three categories according to the following criteria. Less developed/lagging regions have a GDP per capita of less than 60 percent of the country average. Transition regions have a GDP per capita between 60 percent and 90 percent of the country average. More developed/leading regions have a GDP per capita of more than 90 percent of the country average. This regional classification, based on baseline GDP per capita, captures the west–east divide that characterizes the geographic distribution of development disparities in Türkiye. NUTS 1 regions in Northeast Anatolia, Central East Anatolia, and Southeast Anatolia are classified as lagging (less developed) regions in the typology described above ,while most of the NUTS 1 regions in western Türkiye are classified as leading (i.e., more developed).

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