Structural Changes and Competitive Advantages in Iran's Provinces: A Dynamic Spatial Shift- Share Analysis

This paper uses dynamic spatial shift-share analysis to examine Production changes in Iran's provinces for the period of 2000 to 2014. This paper differs from the standard shift-share analysis by combining the dynamic shift-share with the spatial shift-share and decomposing the Production changes of selected sectors into four effects: national growth effect, structural effect, neighborhood competitive effect, and national competitive effect. The distances among the main cities of Iran’s provinces are considered in developing the distance based weight matrix for measuring neighborhood competitive effects. The research found that the effect of the structural change in the water, electricity and natural gas, construction communications, other mines, transportation, industry, and agriculture sectors are positive, therefore the share of the above sectors in the country is increasing and in the oil and other services sectors are negative. The highest neighborhood competitive effect among the provinces occurred in provinces of Bushehr, Tehran, Khuzestan, Kerman, Khorasan, and Isfahan while the least competitive advantage belonged to the province of Kohgilouyeh and Boyerahmad neighborhood competitive effect determine the leading sectors of each province. The national competitive effect is negative for all the provinces of the country, so most economic sectors of the country's provinces will have difficulty in attracting capital and production. Furthermore, it is estimated that the value-added growth rate of the provinces during 2014-2021 will be about 5.67 percent.