Mr Erdogan called the $14.5bn initiative a "turning point for Turkey"
Turkey's prime minister has launched a $14.5bn development plan aiming to ease the poverty that feeds violent Kurdish separatism in the country's south-east.
Recep Tayyip Erdogan said the money would be spent over the next five years to boost employment and improve welfare in the rural region.
Ankara blames Kurdish rebels for some 40,000 deaths in the past 25 years.
But Kurdish politicians boycotted the speech, saying the government refused to recognize the Kurdish minority.
"The enemy of terrorism is an environment of welfare and freedom," Mr Erdogan said.
"As welfare spreads and freedom is strengthened... it is the terrorist organisation which loses," he told a cheering crowd in the region's main city, Diyarbakir.
The prime minister was revealing details of plans he first unveiled in March for economic and cultural initiatives in the region.
He said the scheme - which will include the construction of hydroelectric dams and irrigation projects - would improve farming, create jobs and help avert a future energy shortage.
He also said a Kurdish-language television channel would be launched.
But pro-Kurdish groups said the initiative did not go far enough.
"The people here demand the recognition of Kurdish identity, economic and social plans would not solve the problem of the region," said Nejdet Atalay, of the pro-Kurdish Democratic Society Party.
Since 1984, potential investors have been deterred by violence in the southeast, as the Kurdistan Workers Party (PKK) guerrilla group waged a separatist campaign for independence.
Until 1991, speaking Kurdish was banned in Turkey.
Mr Erdogan's initiative comes as his ruling AK party faces criticism for an alleged support of Islamist activities.
A legal case against it could, at worst, lead to the party's closure and prompt early elections.