Document Type : مقالات پژوهشی

Authors

1 Assistant Professor, Department of Economics, University of Sistan and Baluchestan

2 Master in Economics, University of Sistan and Baluchestan

Abstract

Expended Abstract:
Introduction
Recently, the role of industrial structure on regional employment has attracted much attention. One of the branches of these studies, focusing on Jacobs (1960), suggests that more diversity of industrial structure leads to employment and protects the areas against the adverse effects of external shocks. Jacobs's hypothesis has been validated experimentally in many studies. These studies provide a positive relationship between regional economic diversification and employment growth. Following the increasing trend of studies related to economic diversity on employment growth, regional employment models have also been focused on considering spatial dependency. In terms of industry structure, the more diverse areas can be benefited from their externalities, while more diversity within a region improves technical innovations and their impacts. According to Iran's provinces' employment rate, we found a significant regional dispersion between different regions. Although regional employment growth has received more attention from scholars and policymakers than ever before, few empirical studies have been conducted on the relationship between R&D specialization and diversification and regional employment growth. Therefore, this paper aimed to investigate the spatial effects of R&D specialization and diversification on employment growth in the Iranian provinces from 2005 to 2015.
Methodology
For this study, R&D specialization and diversification in Iran's provinces were first measured, and then the spatial effects of each of these variables on the employment growth of Iranian provinces were estimated using an econometric model. According to Chen& et al. (2015), the Gini index has been used to measure the degree of R&D specialization. Following Ocaner et al. (2018), total diversity is measured by total entropy and related and unrelated diversification.
Results and Discussion
Given that this study's spatial unit of choice is based on administrative boundaries rather than economic regions, it might be expected that spillovers would exist from the neighboring region. So a full Spatial Durbin Model (SDM) specified, which takes the form of the following:
                                         (1)
The SDM allows for the observed value of neighboring region employment growth () and other regional characteristics of neighboring regions' employment () to impact a regions’ employment growth rate. The coefficient  shows the impact of employment growth in neighboring regions on the employment growth rate of a particular region or, in other words, the spatially lagged dependent variable. (Ocaner et al., 2018)
According to Table 1, the results of the estimation of equation1 showed that employees in the sector of services and relevant or irrelevant specialization and diversification had a significant positive effect on employment growth so that the effect of specialization was more than that of irrelevant diversification and the effect of irrelevant diversification was greater than that of the relevant diversification.





Table 1- The results of estimation




Total Effect


Indirect Effect


Direct Effect


Coefficient


Variables




0/0471102
(0/031)


-0/0185246
(0/332)


0/0656348
(0/000)


0/072241
(0/000)[1]


Se




-0/0025043
(0/059)


-0/0031737
(0/016)


0/0006693
(0/275)


0/001489
(0/005)


I




-0/3063919
(0/948)


-2/219845
(0/594)


1/913453
(0/027)


2/730136
(0/000)


S




0/5342869
(0/869)


1/750773
(0/539)


-1/216486
(0/055)


-1/779766
(0/000)


Ss




0/0063199
(0/152)


0/0044254
(0/272)


0/0018945
(0/022)


0/0008242
(0/074)


Cp




0/0455051
(0/026)


0/0413635
(0/023)


0/0041415
(0/186)


-0/0017879
(0/263)


U




5/291128
(0/011)


1/46458
(0/421)


3/826548
(0/000)


1/047751
(0/000)


Ue




-2/636651
(0/010)


-2/894039
(0/002)


0/257388
(0/567)


0/7295003
(0/045)


Re




 


 


 


-0/0322283
(0/000)


w*se




 


 


 


-0/0014365
(0/027)


w*i




 


 


 


-0/2231892
(0/889)


w*s




 


 


 


0/8760202
(0/428)


w*ss




 


 


 


-0/0019838
(0/063)


w*cp




 


 


 


-0/0056924
(0/162)


w*u




 


 


 


0/0448905
(0/920)


w*ue




 


 


 


-2/34029
(0/000)


w*re




 


 


 


0/1652477


rho





 
 Conclusions and Suggestions
The findings of this study supported the Jacobs hypothesis for the Iranian provinces. Also, there was a reverse U-shaped relation between economic specialization and employment growth, indicating that as R&D specialization increased, provincial employment growth increased, but the specialization led to a decrease in employment growth at higher levels. Therefore, as R&D specialization increased, productivity increased, and it was replaced by employment growth. So, the Marshall hypothesis was supported by a range of specialization.
 For more precise analysis, direct, indirect, and total effects have been calculated. The indirect effect measures the effect of changes in the region j on the dependent variable in region i, which i≠j. The direct effect measures a particular explanatory variable in region i on the dependent variable in region i. The calculation of direct and indirect effects showed that increasing R&D specialization in one region could affect employment growth of the same region; however, it had no significant effect on the adjacent regions' employment growth. Increasing the irrelevant diversification in each region also led to employment growth in the same region, but increasing the relevant diversification in the adjacent regions resulted in a decrease in the host region's employment growth.
Increasing the average income of the adjacent regions decreases the host region's growth rate and leads to the host region's employment growth. Thus, the limited influence of entropy related to the growth of provincial employment indicates evidence of transmission mechanisms between regions. Indirect results indicate a significant spatial spillover, and the evidence from estimating direct effect indicates that geography is essential in terms of neighborhood zones. Therefore, in developing programs and policies of increasing employment, it is necessary to pay attention to the potentials of the region and the influence of neighboring areas. It is suggested to deploy industries with more diversity in provinces with lower employment rates. So, creating industrial clusters as a unit for all of the provinces is not a suitable policy. Also, increasing the specialization index by increasing R&D expenditures in areas with a high unemployment rate can increase employment. From this perspective, granting specific and increasing tax credits to the firms in exchange for R&D can be helpful in increasing the employment rate of the province.



The numbers in parentheses are prob.

Keywords

[1]       Arrow, KJ. (1962). The economic implications of learning by doing, The review of economic studies. 29.
[2]       Attaran, M., Zwick, A. (1987). The effect of industrial diversification on employment and income: a case study, Q. Rev. Econ. Bus. 27(4): 38-54
[3]       Bishop, P. (2008). Diversity and employment growth in sub-regions of Great Britain. Appl.
[4]       Econ. Lett. 15. 1105–1109.
[5]       Chen, J.-R., Chu, Y.-P., Ou, Y.-P., &Yang, C.-H. (2015). R&D Specialization and Manufacturing Productivity Growth: A Cross-country Study, Japan and the World Economy, Elsevier, vol. 34: 33-43.
[6]       Dehghanshabani, Z. (2012). Effects of Industrial Agglomeration on Regional Economic Growth in Iran. Journal of Economic Modeling Research. 2(8). (in Persian)
[7]       Dehghan shabani, Z., Javaherei Sadraei, A., & Shahryari fahliyani, M. (2016). The Effect of Spatial Agglomeration of Industrial Activities on Total Factor Productivity in Chemical and Machinery Industries. Urban Economics. 2(1). (in Persian)
[8]       Douth, W. (2010). Agglomeration and regional employment growth, IAB Discussion paper.
[9]       Duranton,G. and Puga,D. (2001). Nursery Cities: Urban diversity, process innovation and the life-cycle of products. American Economic Review.
[10]   Elhorst, J.P. (2009). Spatial panel data models. In: Fischer, M.M., Getis, A. (Eds): Handbook of Applied Spatial Analysis. Springer. Berlin.
[11]   Farahmand, SH., & Abootalebi, M. (2012). The Impact of Diversification and Specialization on Employment Growth in Iranian Provinces. Journal of Economic Research. 47(3). (in Persian)
[12]   Farahmand, SH., Akbari, N., & Rameshkhar, M. (2017). The Impact of Specialization and Diversification in Urban Economic Activities on Labor Productivity in the Provinces of Iran (2000-2013). Journal of Economic Research. 53(3). (in Persian)
[13]   Feldeman, M., Audretsch, D. (1999). Innovation in cities: science-based diversity, specialization and localized competition. Eur. Econ. Rev. 43 (2): 409–429.
[14]   Frenken, K., Van Oort, F.G., Verburg, T., Boschma, R.A. (2004). Variety and Regional
[15]   Economic Growth in the Netherlands. Final report to Ministry of Economic Affairs,
[16]   Ministry of Economic Affairs report series, The Netherlands.
[17]   Glaeser, E., Kallal, H., Sheinkeman, J., Schleifer, A.) 1992(. Growth in cities. J. Polit.
[18]   Econ. 100: 1126–1152.
[19]   Henderson, V. (1997). Externalities and Industrial Development. Journal of Urban Economics, 42(3): 449-470.
[20]   Henderson, J.V., Kuncoro, A., Turner, M.)1995(. Industrial development in cities. J. Polit.Econ. 103 (5): 1067–1090.
[21]   Jacobs, J. (1960). The Economy of Cities. New York: Vintage.
[22]   Jeffrey, D.M., Anna, L.J. (2017). To Specialize or Diversity: Agricultural Diversity and Poverty Dynamics in Ethiopia, world Development: 214-226.
[23]   Jongkuk, L., Young Bong,Ch. (2014). Interplay between internal investment and alliance specialization in R&D and marketing, Industrial Marketing Management (2014),1-13.
[24]   Jong-Rong, Ch., Yun-Peng, Ch., Yi-Pey,O., Chih-H, Y. (2015). R&D specialization and manufacturing productivity growth: A cross-country study, Japan and the World Economy 34-35(2015): 33-34.
[25]   Krugman, P. (1991). Geography and Trade. Boston, MA: MIT Press.
[26]   Lesage, J., Pace, R.K.)2009(. Introduction to Spatial Econometrics. CRC Press. Taylor and Francis Group. Boca Raton. FL. USA.
[27]   Marshall, A. (1920). Principles of economics, London: McMillan, eighth edition reprinted 1962.
[28]   Matthias, M. (2019). On the Cyclicality of R&D activities, Journal of Macroeconomics (2019): 38-58.
[29]   O'connor, S., Doyle, E., Doran, J. (2018). Diversity, employment growth and spatial spillovers amongst Irish regions, Regional science and Urban Economics. 68: 260-267.
[30]   O'Sullivan, A.  (2003). Urban Economics, Translation: ghaderi, J., & Ghaderi, A. Tehran: Noore-E-Elm. (in Persian)
[31]   Paci, R., Usai, S.)2006(. Agglomeration economies and growth – the case of Italian local labour systems, 1991–2, Working Paper CRE.No. 200612, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
[32]   Pede, V.O.)2013(. Diversity and regional economic growth: evidence from US counties. J. Econ. Dev. 38 (3): 111–127
[33]   Porter, M. (1998). Clusters and competition: new agendas for companies, governments, and institutions. Harvard Business School Press.
[34]   Romer, P.M. (1986). Increasing returns and long run growth, Journal of Political Economy, 94.
[35]   Vor, F. and Groot, H. (2008). Agglomeration Externalities and Localized Employment Growth, Tinbergen Institute Discussion paper, 033 (3).
CAPTCHA Image