Economic Convergence and Rent-Seeking in Iran

The neoclassical growth model predicts convergence of productivity or per capita output levels across regions. If participation in the labor force is constant, convergence of per capita income is implied. We investigate this hypothesis for the Iranian economy using data on demand deposits as a proxy for GDP. Furthermore, the analysis controls for the effects of rent seeking. Due to its impact on the allocation of resources, rent-seeking is likely an impediment to overall growth. The results support absolute ß-convergence across Iran's provinces and provide some evidence on the adverse effect of rent seeking on regional convergence.Regional convergence, rent-seeking, economic growth

The Impact of Consuming Petroleum Products on Economic Growth and Regional Convergence in Iran

One of important subjects considered in models of economic growth is convergence hypothesis. It posits that if different regions have identical levels of log-term equilibrium per capita GDP, the poor regions would have higher rate of per capita GDP growth than rich ones. Therefore the more poor regions would converge towards richer regions in terms of economic conditions. However, since determining factors for long term per capita GDP is not the same in all of regions, the conditional convergence is suggested. This hypothesis states that farer regions from long term per capita GDP would have higher rate of per capita GDP. Since determining factors on economic growth can influence on convergence process, the impact of consuming petroleum products as a determining variable on economic growth has been studied. The model of Barro and Sala-I-Martin was applied in order to examine convergence and the impact of consuming petroleum products on convergence and also reduction of regional inequality among Iran's provinces from 2000 through 2011. Results indicated that there is an unconditional convergence among Iran's provinces and also variables of gasoline, diesel, and Mazut (fuel oil) have significant impact on economic growth and lead to negative convergence among Iran's province. Hence, respecting these results it can be concluded that using energy subsides cannot reduce regional inequality. &nbsp

Economic convergence and rent-seeking in Iran

The neoclassical growth model predicts convergence of productivity or per capita output levels across regions. If participation in the labor force is constant, convergence of per capita income is implied. We investigate this hypothesis for the Iranian economy using data on demand deposits as a proxy for GDP. Furthermore, the analysis controls for the effects of rent seeking. Due to its impact on the allocation of resources, rent-seeking is likely an impediment to overall growth. The results support absolute ß-convergence across Iran's provinces and provide some evidence on the adverse effect of rent seeking on regional convergence

The Impact of Oil Revenues on the Iranian Economy and the Gulf States

In line with the neoclassical growth model a persistent stream of oil revenues might have a long lasting impact on GDP per capita in oil exporting countries through higher investment activities. This relationship is explored for Iran and the countries of the Gulf Cooperation Council (GCC) using (panel) cointegration techniques. The existence of cointegration between oil revenues, GDP and investment can be confirmed for all countries. While the cointegration vector is found to be unique for Iran, long run equations for GDP and investment per capita are distinguished for the Gulf countries. Both variables respond to deviations from the steady state, while oil income can be treated as weakly exogenous. The long run oil elasticities for the Gulf states exceed their Iranian counterparts. In addition, investment in Iran does not react to oil revenues in the long run. Hence, oil revenues may have been spend less wisely in Iran over the past decades

Economic growth, openness and foreign direct investment in oil-rich countries

In this study, the effects of trade openness and foreign direct investment on economic growth through the transfer of technology have been examined. To investigate this issue, we use a sample of 19 oil-rich countries over the time period 1991-2006.We estimate two models to investigate this issue. At first, we estimate a model including TO (the ratio of import plus export to GDP) as trade openness, the ratio of FDI to GDP and some other variables as independent variables. The result of this model implies that FDI has positive and significant effect on economic growth while trade openness has negative and significant effect. To examine the negative coefficient of trade openness more, another model is estimated. Export to GDP and Import to GDP were separately considered as trade openness in second model and other variables were same. The result of second model indicates that FDI has positive and significant effect while both trade openness indices have insignificant effect on economic growth