Determining the Level of Regional Inequality in Provinces of Iran: Analysis of Multidimensional Composite Index

Regional inequality is a multidimensional phenomenon and includes different areas of economic, social and cultural. Therefore for any country is necessary to introduce a multidimensional composite index for the measurement of regional inequality. This study aimed to determine the level of regional inequality of Iranian provinces and to identify the main determinants of the inequality, to introduce a combined index for regional inequality measurement. To this end, this study has selected 25 indicators in 5 different dimensions (economic, knowledge and human capital, infrastructure, social-cultural and environmental) and it has collected data relating to the years 2001 and 2013. Also, by applying innovation, it has used two-step principal component analysis. The results show that regional disparities are declining in period under review. In this period, Provinces of Tehran, Yazd and Semnan have had the highest development level, respectively, and Sistan-Baluchistan province also has been fixed at the end place. The results showthat in provinces with higher development level. Economic and human capital indicators were main causes of inequalities in the regional development. Also high population density has forced the government to invest more in infrastructures, health and education in more developed provinces. On the other hand,having knowledge and investment spillovers is an effective factor in development of Tehran’s neighboring provinces.