Industrial Structure and the Quality of Economic Growth in Iran’s Provinces (A tobit Approach)

Document Type : Original Article

Authors

1 Department of Economics, ،Faculty of Literature and Humanities, ،University of Birjand, ، Birjand, ،Iran

2 Faculty of Agriculture, Tarbiat Modares University, Tehran, Iran.

10.48308/jem.2026.242733.2033

Abstract

Low economic growth and the uneven distribution of its benefits are among the key factors contributing to political instability. In this context, the present study employs provincial-level statistical evidence for the period from 2011 to 2021 and utilizes a Tobit approach to examine the effect of industrial structure on the quality of economic growth. Accordingly, two indicators—industrial concentration as measured by the Herfindahl–Hirschman Index and industrial agglomeration proxied by the Location Quotient—are used to measure the structure of industry. The estimates indicate that industrial concentration and agglomeration indices exhibited a relatively smooth and moderately declining trend during the study period. However, the Tobit model results reveal that industrial diversification and agglomeration significantly enhance the quality of economic growth across provinces. This improvement stems from technology spillovers and the transfer of labor skills among various industrial sectors, which, on the one hand, contribute to employment growth and, on the other hand, lead to improvements in the quality of economic growth. Moreover, economic growth and industrialization—given the characteristics of Iran’s labor-market structure—have facilitated the absorption of unemployed workers and promoted a more equitable distribution of the benefits associated with higher economic growth. In contrast, financial development has increased income inequality due to collateral-related constraints and more restrictive conditions governing access to credit, resulting in significant limitations for many economic agents. Overall, expanding the industrial sector’s share in the economy, alongside promoting industrial diversification and agglomeration based on spatial planning policies, constitutes a key strategic pathway for enhancing the quality of economic growth.

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Journal of Economics and Modelling
Volume 16, Issue 2 - Serial Number 62
September 2025
Pages 71-104

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