The Spatial analysis of the Impact of City Size Distribution on Economic Growth in Iran (2006-2011)

In each country, there are a few large cities along with a large number of small and medium size towns. Industrialization and the concentration of resources in large cities causes economic growth. However, resource shortages in small and medium-sized cities would decrease growth. Hence, the effect of city size distribution on economic growth is ambiguous. The objective of the study is to investigate the relationship between the city size distribution and growth in thirty provinces of Iran in 2006-11 through Solow-Swan growth model. The model has been specified as a spatial Durbin model in the form of a dynamic panel data. Results indicate the estimated coefficients are negative for both time and space lags of income per capita. The estimated coefficients of the variables of the Gini-coefficient and the Hirschman-Herfindahl index, as well as the spatial lags of these two are all positive and significant which show positive direct and spatial effects of the distribution of cities size on growth. The coefficients of other independent variables including education, inflation, budget, and fertility rate emerge significant with the expected sign.