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Economic Convergence and Rent-Seeking in Iran

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  • Christian Dreger
  • Teymur Rahmani
  • Hans-Friedrich Eckey

Abstract

The neoclassical growth model predicts convergence of productivity or per capita output levels across regions. If participation in the labor force is constant, convergence of per capita income is implied. We investigate this hypothesis for the Iranian economy using data on demand deposits as a proxy for GDP. Furthermore, the analysis controls for the effects of rent seeking. Due to its impact on the allocation of resources, rent-seeking is likely an impediment to overall growth. The results support absolute ß-convergence across Iran's provinces and provide some evidence on the adverse effect of rent seeking on regional convergence.

Suggested Citation

  • Christian Dreger & Teymur Rahmani & Hans-Friedrich Eckey, 2007. "Economic Convergence and Rent-Seeking in Iran," Discussion Papers of DIW Berlin 741, DIW Berlin, German Institute for Economic Research.
  • Handle: RePEc:diw:diwwpp:dp741
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    Cited by:

    1. Forte, Francesco & Magazzino, Cosimo & Mantovani, Michela, 2010. "On the failure of European planning for less developed regions. The case of Calabria," MPRA Paper 25527, University Library of Munich, Germany.

    More about this item

    Keywords

    Regional convergence; rent-seeking; economic growth;

    JEL classification:

    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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