The Relationship between Industrial Agglomeration, Economic Growth, and Income Inequality in Iran’s Provinces

Document Type : applicative

Authors

1 Master's student in Economics, Baft Higher Education Complex, Shahid Bahonar University of Kerman, Kerman, Iran.

2 Assistant Professor of Economics, Baft Higher Education Complex, Shahid Bahonar University of Kerman, Kerman, Iran.

10.30473/jier.2025.75094.1499

Abstract

agglomeration, economic growth, and interregional income inequality across Iran's provinces during the period (2011-2021).  To achieve this goal, a three-equation simultaneous equations model was designed and estimated using Two-Stage Least Squares (2SLS) and provincial panel data. The results show that industrial agglomeration has a positive and significant effect on economic growth and is itself influenced by economic growth, capital accumulation, market size, and population.  On the other hand, income inequality has a significant negative impact on economic growth, although its effect on agglomeration is statistically insignificant. Moreover, industrial agglomeration reduces regional inequality significantly. Inflation was identified as the most significant factor contributing to increased inequality, while urbanization and economic growth played a role in reducing it. The findings indicate that industrial development can simultaneously promote economic growth and reduce income inequality. Accordingly, it is recommended that policymakers strengthen regional industrial policies, control inflation, and optimize the distribution of financial resources to create a foundation for inclusive and justice-oriented growth across the provinces.

Keywords

Main Subjects

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Journal of Industrial Economics researches
Volume 9, Issue 31
September 2025
Pages 15-34

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History

  • Receive Date: 07 July 2025
  • Revise Date: 11 August 2025
  • Accept Date: 01 September 2025

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