Spatial Analyses of Regional Inequality with Emphasis on Environmental and Political Factors

اقتصاد و توسعه منطقه ای

Article 8, Volume 26, Issue 18, June 2020, Pages 197-220   

Document Type: Research article

DOI: 10.22067/erd.v26i18.72081

Authors

Mohammad Reza Eskandari Ata^{* 1}; nader mehregan²; Alireza Pourfaraj³; Saeed Karimi Petanlar³

¹Graduated PhD in Public Economics, Department of Economics, University of Mazandaran

²Professor of Economics, Department of Economics, Buali Sina University

³Associate Professor of Economics, Department of Economics, University of Mazandaran

Abstract

Introduction
Regional unbalanced growth and the factors affecting it are one of the most important economic issues in developing countries. One of the characteristics of developing countries is the presence of significant regional inequalities. The existence of this phenomenon is one of the main impediments to balanced development in these countries. One of its specific consequences is the creation of inequalities and the consolidation and expansion of deprivation. Inequality alongside widespread poverty can provide grounds for public discontent and thus be one of the concerns of socio-economic policymakers. Considering the importance of balanced regional development in the country and the environmental-spatial potentials and political characteristics of the provinces, this study considers the effects of environmental and political factors on the distribution of inequality in provinces of Iran, considering the neighborhood effects.
 
Theoretical framework
Environmental differences play a decisive role in the distribution of regional inequality. At the early stage of economic development, environmental conditions are one of the most determining factors. For example, favorable environmental conditions are often the basis for rapid growth in developing countries. Although the effects of environmental conditions on regional development at higher levels are less pronounced, the specific functions of these factors are still unknown in many countries. In economic literature, several environmental factors influence and are influenced by the distribution of regional inequality. Variables such as cities with coastal boundaries, commercial areas, tourism, water resources, railways, border areas and urban development are among the areas considered in regional studies. Modern governments, unwittingly or unwillingly, engage in various economic policies such as monetary policy, fiscal policy, and commercial policy. Applying these policies shift interests and the pattern of income distribution and create winners and losers across different segments and groups of society, thereby changing regional inequalities.
 
Methodology
Spatial inequality refers to situations in which different spatial or geographical units of some variables are at different levels. In the present study, after investigating the regional inequality with regard to the effects of spillover in the provinces, an assessment of the environmental and political factors on it during 2006 to 2015 has been examined. The explanatory variables were compiled according to the purpose of the study, based on environmental and political factors that cause regional imbalances and also according to the statistical constraints of the country. According to the theoretical foundations, identifying variables in previous studies as well as statistical feasibility in the country, from three models has been used to investigate the impact of environmental and political factors on regional inequality.
The variables used include urban index, dummy variable for business areas, tourist and religious centers, the logarithm of GDP, ratio of government expenditure to GDP, Ratio of education cost to the government expenditure and the members of parliament.
 
Results and discussion
The evaluation of Population-Weighted Coefficient of Variation (PW-CV) indices show that Iranian provinces during the research period have been very inadequate. The results of estimating Spatial Autoregressive with Autoregressive Error (SARAR) regression models indicate a strong spatial dependence among the provinces. So that the inequality index of each province with an approximate coefficient of 45% is affected by the economic inequality in neighborhood provinces. In the analysis of environmental factors affecting regional inequality; urban development, water resources and tourism have a negative relationship with provinces' inequality and as each of these factors increases, the inequality index of the provinces will decrease. But religious and commercial provinces have a positive impact on economic inequality; as a result, inequalities are higher in these provinces. Results of the estimation of the impact of political variables on regional inequality show that the provinces with a more gross domestic product, have a higher inequality index. Moreover, the larger the size of the government in the provinces, the more economic inequality. Also, increasing the share of education costs from provincial budgets increase regional inequality and in the provinces where the number of members of parliament is higher, there are more economic inequalities.
 
Conclusions and suggestions
According to the results of the present study, the importance of the distribution of inequality in different provinces and the effects of neighborhoods with regard to environmental and political factors are overemphasized. Governments and trusted entities in different areas can be more successful in delivering social justice and reducing regional inequalities by designing and implementing management policies tailored to each province's environmental and political potentials. Managing water resources, paying attention to tourism, controlling suburbs in big and religious cities, and implementing income redistribution policies are some of the policies that can be implemented in environmental and operational areas. Reducing government tenure and administrative bureaucracy are also some of the factors that will be effective in reducing regional inequalities.

Keywords

Regional Inequality; Environmental; Political; Iran Provinces; Spatial Econometrics

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