Inclusion and Exclusion of Spatial Dimension in Space Economy: A Theoretical Discussion

Conventional economic theories, traditional economics, main stream, Anglo-Saxon and/or Anglo-American economists have many assumptions. Which limit their function in explaining spatial dimensions. One of the major assumptions which highlights the weakness of these theories is the assumption of homogenous space which is rooted in the perfect competition. Accepting such an assumption means not only neglecting the existence of geographical location of production activities, but also leaves it to God's hand. Walter Isard, inspired translating the German location theories of 19 and beginning of 20th centuries and then comparing them with the function of Anglo-Saxon economic theories revealed this lacuna in 1949 which was not known to English speaking economists. In 1950, Francois Perroux has further elaborated and analyzed this issue. Continuation of such efforts not only led to the advent of spatial economic theories, but also provided further new paradigms of thoughts like the New Economic Geography and the New International Trade Theory in the 21th century. In this article we show that highlighting this issue for following two reasons are important: First; concentration on economic policies and planning at macro-economic level and neglecting the issue of spatial dimensions in explaining spatial development in Iran . Second; teaching economic science in the different faculties of economics in Iran are mainly based on the main stream paradigm of neoclassical thought based on the assumption of homogenous space as if the country lacks 31 provinces with different geographical economic structures.