Geographical Aggregation of Industrial Activities and Productivity Growth: The Evidence from Iran's Provinces Manufacturing Industries

Subject Areas : Labor and Demographic Economics

Morteza Sameti ¹ , mahdi fathabadi ² , Homayoun Ranjbar ³

1 - استاد گروه اقتصاد، دانشگاه آزاد اسلامی واحد خوراسگان (اصفهان)
2 - دانشجوی دکتری اقتصاد دانشگاه آزاد اسلامی واحد خوراسگان (اصفهان)
3 - استادیار گروه اقتصاد دانشگاه آزاد اسلامی واحد خوراسگان (اصفهان)

Received: 2016-11-02 Accepted : 2016-11-02 Published : 2016-08-22

Keywords: Productivity, R14, Williamson hypothesis, Ordinary Least Squares, Generalized method of moments, JEL Classification: R12, O40 Keywords: Industrial Aggregation,

Abstract :

This paper investigates the impact of spatial aggregation of industrial activities on manufacturing industries productivity growth of Iran's provinces during 2004-2013, using cross-section data and dynamic pooled regression by Generalized Method of Moments (GMM). To measure industrial aggregation Ellison Glaeser (EG) index was used. The findings support the “Williamson hypothesis”, that is, aggregation of industrial activities has positive effect on productivity growth only up to a certain level of development. By improving infastructures and markets expand, congestion externalities vary in the development phases and it can result in more dispersion in economic activities. Namely, aggregation accumulates human and physical capital and this accelerates economic growth.

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