Economic Research and Perspectives

Economic Research and Perspectives

Assessing Structural Changes and Regional Inequalities in the Provinces of Iran

Authors
mahla afsharpour 1
Seyed Abdolmajid Jalaee Esfandabadi 2
1 Ph.D. candidate in Economics, Shahid Bahonar University of Kerman
2 Professor of Economics, Shahid Bahonar University of Kerman
Abstract
Aim and Introduction

Structural changes affect the share of final demand components in the whole economy. In fact, the importance of these changes is shown in the relative share of each of the economic sectors in terms of production and the factors used in production, If it causes economic growth through the organizational and institutional changes of the sectors.Therefore, structural changes are important and interesting topics in the world's economic research centers, and the results of these studies have important political implications. Since national and provincial credits are implemented in Iran every year in the form of numerous plans and projects, it is important to pay attention to this issue. First, it is necessary to determine the relative advantage of the provinces in order to optimally allocate credits in creating regional balances and to direct the provinces of the country towards regional specialization. Then credits should be allocated in the fields of growth and development and in order to create regional balances.

Methodology

In this study, due to the lack of up-to-date statistical data in the provincial area, the analysis of structural changes and regional inequalities has been investigated based on three scenarios. In the first scenario, in order to examine structural changes and regional inequalities, the method of basic economic analysis and the measurement of shift share indicators has been used. In the second scenario, structural changes in the interaction between Iran's provinces have been investigated using Heckscher-Ohlin theory. And in the third scenario, economic complexity indicators have been used to compare and analyze the state of relative advantage of the investigated provinces.

Findings

The findings of the study are presented under three scenarios. The results of the application of the shift share model in the first scenario show the disproportionate growth of the employees of different sectors of the provinces in the period under review. This issue is shown in negative structural changes. In other words, the combination of activities in the provinces has been unequal. Also, the effects of neighboring provinces on each other due to the dimension of distance and growth spillover have been neglected.

In the second scenario, the structural changes in the interaction between the provinces of the country have been investigated using Heckscher Ohlin's theory.

And finally, in the third scenario, economic complexity indicators have been used to compare and analyze the relative advantage of the investigated provinces. The factor content of trade in different sectors showed that with the export of goods and services, production factors have been exported and in sectors where advanced technology is needed, intermediate and capital goods have been imported. In the third scenario, The achievability of the production of a product is confirmed by the complexity sub-indices according to the access to production factors for the production and export of goods in a province. Hence, the difference between the provinces in terms of the density index shows that in dense areas, the provinces have exported products with relative advantage. So that the provinces have provided the required capabilities for production and export of various products. Therefore, the maximum capability is available for the development of the user's product group. On the other hand, although the provinces have specialized in several commodity groups, which has caused high density in the province, they have not been able to develop significantly the space around the goods. It is noteworthy that these options are set only based on the analysis of inter-departmental relations and in many cases, various internal and external factors have been ignored. Therefore, it can only draw a view of the communication between departments in the provinces of the country. Among the causes and factors of inequality and differences in the growth pattern of the provinces, we can refer to the macro policies of the country, the inherent characteristics of the regions, the macro strategies of the country regarding industrial location and geographical distribution of activities. Also, the country's trade strategy in the field of developing the exports of some goods can affect the regional growth pattern.

Discussion and Conclusion

Strategic sectors are not necessarily profitable economic sectors. But they can play the role of leadership and influence other sectors, and can spread the effects of growth and development to other economic sectors. Therefore, it can be said that employment policies should be adopted and applied based on the potential of the provinces. Then, investment should be made in the designated industries in the field of employment in each province. Then, increasing the level of interactions will bring many benefits to the provinces and ultimately to the country. Of course, the development of different provinces may not be compatible with each other in different sectors due to potential regional possibilities. In other words, although attention to macro policies is accepted as a principle in regional policy making. In fact, ignoring the possibilities, potential capacities, and relative advantages of each region and structural changes, leads to underdevelopment and inequality among regions. Hence, it is suggested that; Employment policies should be adopted and applied based on the relative advantage of the provinces at the country level to improve the favorable combination of industries and the lack of concentration of industries and the balanced distribution of employment. If there is a hidden comparative advantage, revealing this feature can be used as a reliable indicator in line with other macro indicators. It is worth noting that not paying attention to comparative advantage in the long run will be detrimental to Iran's growth. As well as considering the country's educated population and service users, it is necessary to put the development of productive services on the agenda of the country's planes.
Keywords
Structural change
Inequality
Heckscher-Ohlin
Comparative advantage

Subjects

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Economic Research and Perspectives
Volume 23, Issue 1
Spring 2023
Pages 165-196