Analysis of the Relationship between Regional Inequality and Economic Development in Iran: Spatial Dynamic Panel Data Approach

Regional inequality and imbalance in spatial structure of the regions are common phenomena that many countries have been facing with them, especially developing countries. Some effects of regional inequality can be mentioned as development of some regions, formation and intensification of huge inequalities in income and social welfare between different regions and socioeconomic complications. The present study analyzes the relationship between regional inequality and economic development among the provinces of Iran and seeks to answer this questions: is there an inverse U relationship between regional inequality and development between regions? In order to answer the questions of this research, regional inequality was calculated using Williamson's index. A spatial dynamic panel data econometric model was used to investigate the relationship between regional inequality and economic development between the five regions of the country in the years 2001-2015. The results show that the relationship between regional inequality and development is U shape inverse, which represents an increase in inequality in the early stages of development of the regions, and then inequality has decreased as development trend improved gradually.