Effective Factors on the Growth of Provinces of Iran: A Spatial Panel Approach


1 Faculty of Economics, University of Tehran, Tehran, Iran

2 Faculty of Economics, University of Tabriz, Tabriz, Iran



n order to have a successful regional planning policy, one needs to know exactly the effective factors on the growth of the provinces. Thus, determining and evaluating these growth rates are important for urban and regional planners. The main goal of this study is to determine the effective factors on the growth (population growth and per capita income growth) of Iran’s provinces. In this regard, three groups of factors, economic, social and locational, were considered. The population growth and per capita income growth models were considered via spatial panel for the period of 2007-2015. We have also studied the spatial dependence as well as spatial spillovers between the provinces on regional growth. The results show that there have been meaningful growth spillovers between the provinces of Iran. Therefore, any change in one province, besides having its effect on that province also has spillover effects on neighboring provinces. Also the results show that real per capita income, transportation infrastructure, the index of service specialization, the index of production specialization and the index of competitiveness are the most important factors on the growth of the provinces of Iran.


Aghaei, M., Rezagholizadeh, M., & Bagheri, F. (2013). The Effect of Human Capital on Economic Growth: The Case of Iran’s Provinces. Quarterly Journal of Research and Planning in Higher Education, 19(1), 21–44.
Aghion, P., & Durlauf, S. N. (2014). Handbook of Economic Growth. New York: Elsevier.
Anderson, G., & Ge, Y. (2004). Do Economic Reforms Accelerate Urban Growth? The Case of China. Urban Studies, 41(11), 2197–2210.
Anselin, L. (2005). Exploring Spatial Data with GeoDa: A Workbook. Retrieved from
Anselin, L., Le Gallo, J., & Jayet, H. (2008). Spatial Panel Econometrics. In: Matyas, L. & Sevestre, P. (Ed.). The Econometrics of Panel Data, Fundamentals and Recent Developments in Theory and Practice (3rd Ed, 627–662). Berlin-Heidelberg: Springer-Verlag
Chung, H. Y. (1989). Urban Growth Determinants in Korea: with Special Reference to the Three Regional Metropolitan Cities. (Doctoral Dissertation, Sheffield University, UK). Retrieved from http://etheses.whiterose.ac.uk/6070/1/419643.pdf.
Da Mata, D., Deichmann, U., Henderson, J. V., Lall, S. V. & Wang, H. G. (2007). Determinants of City Growth in Brazil. Journal of Urban Economics, 62(2), 252–272.
Dehghan Shabani, Z., & Shahnazi, R. (2017). Analysis of Inter-Province Spatial Spillover Effects of Human Capital on Economic Growth in Iran. Journal of Economic Research, 52(1), 89–115.
Delfmann, H., Koster, S., McCann, P. & Van Dijk, J. (2014). Population Change and New Firm Formation in Urban and Rural Regions. Regional Studies, 48(6), 1034–1050.
Deliktas, E., Özlem Önder, A., & Karadag, M. (2013). The Size Distribution of Cities and Determinants of City Growth in Turkey. European Planning Studies, 21(2), 251–263.
Demurger, S. (2001). Infrastructure Development and Economic Growth: An Explanation for Regional Disparities in China. Journal of Comparative Economics, 29, 95–117.
Demurger, S., Sachs, J. D., Woo, W.T., Bao, S., Chang, G., & Mellinger, A. (2002). Geography, Economic Policy, and Regional Development in China. Asian Economic Papers, 1(1), 146–197.
Elhorst, J. P., & Vega, S. H. (2013). On Spatial Econometric Models, Spillover Effects. and W. ERSA Conference Papers, Retrieved from
--------- (2014a). Matlab Software for Spatial Panels. International Regional Science Review, 37(3), 389–405.
Elhorst, J. P. (2014b). Spatial Econometrics: From Cross-Sectional Data to Spatial Panel. Berlin-Heidelberg: Springer-Verlag.
Glaeser, E. L., & Shapiro, J. M. (2003). Urban Growth in the 1990s: is City Living Back. Journal ofRegional Science, 43, 139–165.
Henderson, J. V., & GunWang, H. (2007). Urbanization and City Growth: The Role of Institutions. Regional Science andUrban Economics, 37, 283–313.
Hoover, E., & Giarratani, F. (1999). An Introduction to Regional Economics (3rd Ed.). Virginia: Regional Research Institute.
Khalili Araghi, M., Nobahar E., & Kabiri Renani, M. (2017). Determinants of Population Growth of the Cities of Iran: A Spatial Econometrics Approach. Quarterly Journal of Economic Research and Policies, 25(83), 7–32.
LeSage, J. P., & Pace, R. K. (2009). Introduction to Spatial Econometrics. Boca Raton, FL: CRC Press Taylor & Francis Group.
Leyland, A. H. (2010). No Quick Fix: Understanding the Difference between Fixed and Random Effect Models. Journal of Epidemiology and Community Health, 64(12), 1027–1028.
Lu, C., Wu, Y., Shen, Q., & Wang, H. (2013). Driving Force of Urban Growth and Regional Planning: A Case Study of China's Guangdong Province. Habitat International40, 35–41.
McCann, P. (2013). Modern Urban and Regional Economics (2nd Ed.). Oxford: Oxford University Press.
Mehrara, M., & Mohammadian Nikpey, E. (2015). Economic Investigation of the Crime and It's Inter-Provincial Spillover Effects in Iran: A Spatial Panel Approach. Economic Modelling, 9(29), 43–62.
Meliciani, V., & Savona, M. (2015). The Determinants of Regional Specialization in Business Services: Agglomeration Economies, Vertical Linkages and Innovation. Journal of Economic Geography, 15, 387–416.
O’Sullivan, A. (2011). Urban Economics (8th Ed.). New York: McGraw Hill.
Pred, A. R. (1977). City-Systems in Advanced Economics. London: Hutchinson.
Rogers, E. M. (1995). Diffusion of Innovations. New York: Free Press.
Simon, C. J., & Nardinelli, C. (2002). Human Capital and the Rise of American Cities, 1900–1990. Regional Science and Urban Economics, 32, 59–96.
Snijders, T. A. B., & Bosker, R. J. (2012). Multilevel Analysis: An Introduction to Basic and Advanced Multilevel Modelling (2nd Ed.). London: Sage Publications Ltd.
Tan, R., Liu, Y., Liu, Y., He, Q., Ming, L., & Tang, S. (2014). Urban Growth and its Determinants across the Wuhan Urban Agglomeration, Central China. Habitat International, 44, 268–281.
Weeks, M., & Yao, Y. (2003). Provincial Conditional Income Convergence in China, 1953–1997: A Panel Data Approach. Econometric Reviews, 22(1), 59–77.
Xu, L. C., & Zou, H. (2000). Explaining the Change of Income Distribution in China. China Economic Review, 11, 149–170.
Zhang, Z., Liu, A., & Yao, S. (2001). Convergence of China's Regional Incomes. China Economic Review, 12, 243–258.
Zhang, W. (2001). Rethinking Regional Disparity in China. Economics of Planning, 34, 113–138.
Zhang, Q., & Su, S. (2016). Determinants of Urban Expansion and their Relative Importance: A Comparative Analysis of 30 Major Metropolitans in China. Habitat International, 58, 89–107.