The Role of “Related Variety” in Regional Economic Development of Iran: Employment Growth or Economic Productivity?

Document Type : Research Paper

Author

Department of Urban and Regional Planning, Faculty of social sciences, Allameh Tabataba'i University, Tehran, Iran

10.22059/ier.2023.347250.1007515

Abstract

This study, aims to examine the impact of related variety on regional economic development in Iran. The study constructed an index for the concept of related variety based on spatial productivity indicators and the production pattern in the input-output model. The findings reveal that Tehran, Bushehr, and Gilan provinces have the highest related variety indicator values. Additionally, the correlation analysis between this indicator and economic performance indicators suggests a direct, albeit not particularly strong, linear relationship between them. Furthermore, the causal relationship analysis, using the related variety indicator as the independent variable, demonstrates that related variety significantly contributes to regional employment growth. However, its impact on productivity growth in economic activities is not statistically significant. Therefore, the author recommends that regional development policies prioritize enhancing a diverse range of related activities to facilitate knowledge and experience spillover, particularly if the goal is to increase employment rates. This approach should be considered over a narrow focus on specialization policies and the creation of growth poles based solely on relative advantages.

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Iranian Economic Review

Articles in Press, Accepted Manuscript
Available Online from 04 December 2023

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