The Effect of Accumulation and Urbanization Savings on the Economic Growth of Food and Beverage Industries

The ‘new economic geography’ literature has been developed as a theory of the emergence of large agglomerations that rely on increased returns to scale and transportation costs. This article attempted to investigate how the savings caused by localization and also the savings caused by urbanization on the economic growth of Iran's food and beverage industries in the period 2013-2019. The statistical population of the study included 31 provinces of the country and dynamic panel data and generalized torque method (GMM) was used to estimate the model. The Herfindahl-Hirschman Concentration Index (HHI) was selected to measure the savings from corporate aggregation, and the first urban index was selected to measure the savings from urbanization. The results indicated that urban savings had a positive effect on the economic growth of food and beverage industries; however, its variable coefficient (with a coefficient of 0.61) was not statistically significant. The economies of localization had a significant positive effect (with a coefficient of 0.44) on the economic growth of these industries, which means that the concentration of firms close to each other would save them. The results also show that by choosing the right and creating and developing clusters in industrial areas, it is possible to have a significant impact on the economic development of that area by increasing cooperation and exchange of information. Therefore, it is recommended to apply centralization policies and avoid decentralization policies for firms with similar activities.