Regional Disparities in Productivity of Manufacturing Industries of Iran

The aim of this study is calculating and comparing the productivity of labor and capital in manufacturing industries of Iranian provinces during 2003-2013. In this context, the rate of fixed assets depreciation is calculated with using Statistical Center and Central Bank data, and then the capital stock is estimated by the perpetual inventory method. The production function of provinces is estimated with applying linear Cobb-Douglas production function and using econometric panel data method. Then, generalized productivities of labor and capital in manufacturing industries are calculated and compared in the provinces. The results of this study indicate that although in the early years, regional disparities in productivity of labor and capital are not significant, but over time, their variation range has increased, and provinces moved to more heterogeneity. However, the low level of productivity of labor and capital is a common feature of all provinces. Therefore, the policy recommendation of this study is planning for increasing the productivity of labor and capital of manufacturing industries in the provinces and distributing the resources according to possibilities and limitations of each province to decreasing the disparities and achieving to regional balances. This becomes more important, especially with beginning the sixth development plan.