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Regional dimensions of economic development in Iran: A new economic geography approach

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  • Farmanesh, Amir

Abstract

This paper presents a spatial analysis on regional dimensions of poverty and economic development across provinces of Iran. It offers the first ever estimation made in developing countries using this strand of "New Economic Geography" (NEG) models and provides a comparison of the results between previously studied developed countries and Iran as a developing country. The goal of this study is to offer an analysis of the effects of agglomeration and dispersion economies on the patterns of regional economic development in Iran. It analyzes the linkages among adjacent provinces as well as effects of agglomeration and dispersion economies on the patterns of Iran's regional economic development through empirical estimation of two of the NEG models. First, it presents an estimation of a "Market Potential Function" (MPF), in which wages are associated with proximity to consumer markets. Second, the paper estimates an augmented MPF derived from the Krugman model of economic geography. The parameters in this model estimate the importance of transportation cost and economies of scale. The estimation results suggest that Iran showed generally good fit to both models and satisfied both MPF and Krugman model specifications. Compared to other similar studies in developed countries, Iran shows smaller returns to scale and consistently higher size of the effect of market potential on wages.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 13580.

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Date of creation: 02 Jan 2009
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Handle: RePEc:pra:mprapa:13580

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Related research

Keywords: New Economic Geography; Spatial agglomeration; Market potential; Market structure; Increasing returns to scale; Transport costs; Iranian economy; Economic development in Iran; Income distribution in the provinces of Iran; Empirical evaluation;

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Cited by:
  1. Mehmet Burak Turgut, 2014. "Regional Economic Activity in Turkey: A New Economic Geography Approach," Working Papers 2014/5, Turkish Economic Association.

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