A Survey on Factors Affecting the Location of Industries in Iran (Case Study: Electronics Industry)

The subject of microeconomics is the behavior of firms, individuals and government. According to production theory, rational behavior of the firms, leads to profit maximization. So, one of the most important rational questions in production theory, is the determination of a suitable location of the firm. In the last two decades, several theories have been proposed to analyze the factors affecting the location of economic activities. These theories emphasize on many factors that can be summarized in two categories: factors affecting supply and demand. The aim of this article is to determine and analyze factors affecting the location of electronics industry in Iran. In this regard, 25 factors were identified. Whoever, this number of explanatory variables decreases the number of degree of freedom in a Logit and/or Probit model dramatically. So, the principal component analysis was used to decrease the number of LHS variables. Results show that the industrial development and the creation and maintenance of facilities have important effects on the location of electronics industry in different provinces of Iran. Also due to high proportion of the value to the weight of the final products or the high mobility and tradability of electronics industry products, local and surrounding area‘s income have negative impacts on the industry location.