Advertisement

Income convergence in Iranian regions

  • Christian Dreger
  • Teymur Rahmani

Abstract

The neoclassical growth model predicts convergence of productivity or per capita output levels across regions. We explore this hypothesis for Iranian regions. The analysis uses demand deposits as a proxy for regional GDP, because the latter has a high degree of imprecision. Moreover, the paper investigates the effects of rent-seeking on the convergence process. In contrast to previous papers, the analysis shows robust evidence in favour of both sigma and beta convergence across the Iranian provinces. In addition some indications on the adverse effect of rent-seeking on regional convergence is provided.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Acemoglu, D. (1995), Reward structures and the allocation of talent, European Economic Review 39, 17–33.CrossRefGoogle Scholar
  2. Acemoglu, D., Johnson, S., Robinson, J.A. (2001), The colonial origins of comparative development: An empirical investigation, The American Economic Review 91, 1369–1401.CrossRefGoogle Scholar
  3. Acemoglu, D., Johnson, S., Robinson, J.A. (2002), Reversal of fortune: Geography and institutions in the making of the modern world income distribution, Quarterly Journal of Economics 117, 1231–1294.CrossRefGoogle Scholar
  4. Acemoglu, D., Robinson, J.A. (2000), Political losers as a barrier to economic development, American Economic Review 90, 126–130.CrossRefGoogle Scholar
  5. Alizadeh, P. (2003), Iran's quandary: Economic reforms and the “structural trap”, The Brown Journal of World Affairs 9, 267–281.Google Scholar
  6. Anselin, L. (1988), Spatial econometrics: Methods and models, Kluwer Academic Publishers, Dordrecht.Google Scholar
  7. Auty, R.M. (1993), Sustaining development in mineral economies: The resource curse thesis London.Google Scholar
  8. Baland, J., Francois, P. (2000), Rent-seeking and resource booms, Journal of Development Economics 61, 527–542.CrossRefGoogle Scholar
  9. Barro, R.J. (1991), Economic growth in a cross section of countries, Quarterly Journal of Economics 106, 407–443.CrossRefGoogle Scholar
  10. Barro, R.J., Sala-I-Martin, X. (1991), Convergence across states and regions, Brookings Papers On Economic Activity 1, 107–182.CrossRefGoogle Scholar
  11. Barro, R.J., Sala-I-Martin, X. (1992), Convergence, Journal of Political Economy 100, 223–251.CrossRefGoogle Scholar
  12. Barro, R.J., Sala-I-Martin, X. (2003), Economic Growth, 2nd Edition, Cambridge, MA.Google Scholar
  13. Baumol, W.J. (1990), Entrepreneurship: Productive, unproductive, and destructive, Journal of Political Economy 98, 893–921.CrossRefGoogle Scholar
  14. Baumol, W.J. (2004), On Entrepreneurship, growth and rent-seeking: Henry George Updated, The American Economist 48, 9–16.Google Scholar
  15. Bjorvatan, K., Selvik, K. (2005), Destructive competition: Oil and rent seeking in Iran, Unpublished Paper.Google Scholar
  16. Brumm, H.J. (1999), Rent seeking and economic growth: Evidence from the States, Cato Journal 19(1), 7–16.Google Scholar
  17. Caselli, F., Coleman W.J. (2001), The U.S. structural transformation and regional convergence: A reinterpretation, Journal of Political Economy 109, 584–616.CrossRefGoogle Scholar
  18. Cashin, P. (1995), Economic Growth and Convergence across the Seven Colonies of Australasia: 1861–1991, The Economic Record 71, 132–144.CrossRefGoogle Scholar
  19. Cole, I.M., Chawdhry, M.A. (2002), Rent-seeking and economic growth: Evidence from a panel of U.S. States, Cato Journal 22(2), 211–225.Google Scholar
  20. Coulombe, S., Lee, F.C. (1995), Convergence across Canadian Provinces, 1961 to 1991, Canadian Journal of Economics 28, 886–898.CrossRefGoogle Scholar
  21. Cuadrado-Roura, J.R. (2001), Regional convergence in the European Union: From hypothesis to the actual trends, The Annals of Regional Science 35, 333–356.CrossRefGoogle Scholar
  22. Dall'erba, S. (2005), Distribution of regional income and regional funds in Europe: An exploratory spatial data analysis, The Annals of Regional Science 39, 121–148.CrossRefGoogle Scholar
  23. Darby, J., Li, C., Muscatelli, V.A. (2004), Political uncertainty, public expenditure and growth, European Journal of Political Economy 20, 153–179.CrossRefGoogle Scholar
  24. Engerman, S.L., Sokoloff, K.L. (2002), Factor endowments, inequality, and paths of development among New World Economies, NBER Working Papers Series 9259.Google Scholar
  25. Fujita, M., Hu, D. (2001), Regional disparity in China 1985–1994: The effects of globalization and economic liberalization, The Annals of Regional Science 35, 3–37.CrossRefGoogle Scholar
  26. Gezici, F., Hewings, G.J.D. (2004), Regional convergence and the economic performance of peripheral areas in Turkey, Review of Urban and Regional Development Studies 16, 113–132.CrossRefGoogle Scholar
  27. Gripaios, P. Bishop, P., Keast, S. (2000), Differences in GDP per head in UK Counties: some suggested explanations, Applied Economics, 32, 1161–1167.CrossRefGoogle Scholar
  28. Grossman, H.I. (1998), Producers and predators, NBER Working Papers Series 6499.Google Scholar
  29. Grossman, H.I., Kim, M., 1995. Swords or plowshares? A Theory of the security of claims to property. Journal of Political Economy 103, 1275–1288.CrossRefGoogle Scholar
  30. Guetat, I. (2006), The effects of corruption on growth performance of the MENA countries, Journal of Economics and Finance 30, 208–221.CrossRefGoogle Scholar
  31. Haggard, S. (2004), Institutions and growth in East Asia, Studies in Comparative International Development 38, 53–81.CrossRefGoogle Scholar
  32. Hall, R.E., Jones, C.I. (1999), Why do some countries produce so much more output per worker than others?, The Quarterly Journal of Economics 114, 83–116.CrossRefGoogle Scholar
  33. Hossain, A. (2000), Convergence of per capita output levels across regions of Bangladesh: 1982–1997, IMF Working Paper WP/00/121.Google Scholar
  34. Jian, T., Sachs, J.D., Warner, A.M. (1996), Trends in regional inequality in China, NBER Working Papers Series 5412.Google Scholar
  35. Kang, D.C. (2002), Bad Loans to Good Friends: Money Politics and the Developmental State in South Korea, International Organization 56(1), 177–207.CrossRefGoogle Scholar
  36. Karras, G. (2001), Long-run economic growth in Europe: Is it endogenous or neoclassical? International Economic Journal 15, 63–76.CrossRefGoogle Scholar
  37. Kim, J. (2005), Convergence hypothesis of regional income in Korea, Applied Economic Letters 12, 431–435.CrossRefGoogle Scholar
  38. Knack, S., Keefer, P. (1995), Institutions and economic performance: Cross-country tests using alternative institutional measures, Economics and Politics 7, 207–227.CrossRefGoogle Scholar
  39. Kosfeld, R., Eckey, H., Dreger, C. (2006), Regional productivity and income convergence in the Unified Germany, 1992–2000, Regional Studies 40, 755–767.CrossRefGoogle Scholar
  40. Krueger, A.O. (1974), The political economy of the rent-seeking society, The American Economic Review 64, 291–303.Google Scholar
  41. Li, H., Zhou, L. (2005), Political turnover and economic performance: The incentive role of personnel control in China, Journal of Public Economics 89, 1743–1762.CrossRefGoogle Scholar
  42. Lin, S., Song, S. (2002), Urban economic growth in China: Theory and evidence, Urban Studies 39, 2251–2266.CrossRefGoogle Scholar
  43. Lopez-Bazo, E., Vaya, E., Mora, A.J., Surinach, J. (1999), Regional economic dynamics and convergence in the European Union, The Annals of Regional Science 33, 343–370.CrossRefGoogle Scholar
  44. Magee, S.P., Brock, W.A., Young, L. (1989), Black hole tariffs and the endogenous policy theory, Cambridge: Cambridge University Press.Google Scholar
  45. Mankiw, N.G., Romer, D., Weil, D.N. (1992), A contribution to the empirics of economic growth. The Quarterly Journal of Economics 107, 407–437.CrossRefGoogle Scholar
  46. Mauro, P. (1995), Corruption and growth, The Quarterly Journal of Economics 110, 681–710.CrossRefGoogle Scholar
  47. Mauro, P. (1998), Corruption and the composition of government expenditure, Journal of Public Economics 69, 263–279.CrossRefGoogle Scholar
  48. Maurseth, P.B. (2001), Convergence, geography and technology, Structural Change and Economic Dynamics 12, 247–276.CrossRefGoogle Scholar
  49. McGuiness, S., Sheehan, M. (1998), Regional convergence in the UK, 1970–1995, Applied Economics Letters 5, 653–658.CrossRefGoogle Scholar
  50. Mehlum, H., Moene, K., Torvik, R. (2003), Predator or prey? Parasitic enterprises in economic development, European Economic Review 47, 275–294.CrossRefGoogle Scholar
  51. Murphy, K.M., Shleifer, A., Vishny, R.W. (1991), The allocation of talent: Implications for growth, The Quarterly Journal of Economics 106, 503–530.CrossRefGoogle Scholar
  52. Murphy, K.M., Shleifer, A., Vishny, R.W. (1993), Why is rent-seeking so costly to growth?, The American Economic Review (Papers and Proceedings) 83, 409–414.Google Scholar
  53. Noorbakhsh, F. (2002), Human development and regional disparities in Iran: A policy model, Journal of International Development 14(7), 927–949.CrossRefGoogle Scholar
  54. Noorbakhsh, F. (2005), Spatial inequality, polarization and dimensions in Iran: New empirical evidence. Oxford Development Studies 33(3/4), 473–491.CrossRefGoogle Scholar
  55. North, D.C. (1990), Institutions, institutional change, and economic performance, Cambridge: Cambridge University Press.Google Scholar
  56. Paci, R., Pigliaru, F. (1997), Structural change and convergence: An Italian regional perspective, Structural Change and Economic Development 8, 297–318.CrossRefGoogle Scholar
  57. Persson, J. (1997), Convergence across the Swedish countries, 1911–1993, European Economic Review 41, 1835–1852.CrossRefGoogle Scholar
  58. Petrakos, G., Saratsis, Y. (2000), Regional inequalities in Greece, Papers in Regional Science 79, 57–74.CrossRefGoogle Scholar
  59. Rahmani, T., Eckey, H.-F. (2004), Testing regional convergence in Iran's economy, Iranian Economic Review 9, 103–119.Google Scholar
  60. Rock, M.T., Bonnett, H. (2004), The comparative politics of corruption: Accounting for the East Asian paradox in empirical studies of corruption, growth and investment, World Development 32, 999–1017.CrossRefGoogle Scholar
  61. Sachs, J.D., Warner, A. (1995), Economic reforms and the process of global integration, Brookings Papers on Economic Activity 1, 1–95.CrossRefGoogle Scholar
  62. Sala-I-Martin, X. (1996), Regional cohesion: Evidence and theories of regional growth and convergence, European Economic Review 40, 1325–1352.CrossRefGoogle Scholar
  63. Shleifer, A., Vishny, R.W. (1993), Corruption, The Quarterly Journal of Economics 108, 599–617.CrossRefGoogle Scholar
  64. Siriopoulos, C., Asteriou, D. (1998), Testing for Convergence Across the Greek Regions, Regional Studies 32, 537–546.CrossRefGoogle Scholar
  65. Terrasi, M. (1999), Convergence and divergence across Italian regions, The Annals of Regional Science 33, 491–510.CrossRefGoogle Scholar
  66. Trivedi, K. (2003): Regional convergence and catch up in India between 1960 and 1992, University of Oxford, Nuffield College Economics Paper 2003–01.Google Scholar
  67. Tullock, G. (1967), The Welfare Costs of tarrifs, monopolies, and theft, Western Economic Journal 5, 224–232.Google Scholar
  68. Tullock, G. (1971), The cost of transfer, Kyklos 27, 629–642.CrossRefGoogle Scholar

Copyright information

© Gabler Verlag | Springer Fachmedien Wiesbaden GmbH 2011

Authors and Affiliations

  • Christian Dreger
    • 1
  • Teymur Rahmani
    • 2
  1. 1.DIW BerlinBerlin
  2. 2.Faculty of EconomicsUniversity of TehranTehran, Iran

Personalised recommendations