Regional development model for East Azerbaijan.

Author:Alipour, Hamid Reza


Generally speaking, economic development is a process in which the products of a society increase on the basis of extension, creation and self generation of modern technology. In this sense, economic development is the same as product increase; however, the sort of production under consideration originates from the extension and creation of modern technology in economic development subjects. Therefore, the product increase based on the export of primary material does not result in the expansion of economic development. In this respect, some economic texts mention that economic development is a qualitative subject and includes structural changes, too. This discussion has no contradiction with the abovementioned definition, primarily, because it is not possible to create basic changes in the production technology without having structural changes (6), (14) a and then, the basic changes in technology, naturally, result in structural changes.

Production process: The important issue here is how the production based on modern technology can be expanded. This depends on factors which influence the modern production process (12). These factors include:

* Machinery, tools and production equipment

* Skilled manpower in production areas

* Skilled manpower in management area

* Information and technical science in production

Figure 1 shows the factors mentioned and their effects on the production process.


Thus, utilizing these factors in economic agencies is necessary to increase the production based on modern technology, that is to say, economic development expansion in the province requires continuous improvement in these factors.

Shift share analysis: Generally, local employment changes are more or less concentrated in certain industries than they are in the nation as a whole. Most often, this difference is rooted in the region's industrial structure. For example, an area with several rapidly growing industries might display high rate of overall employment gain. Likewise, a region with several declining industries might experience significant job losses. In examining the regional labor market merely knowing that employment changes have occurred is not sufficient. The ability to separate local growth factors from national growth factors is an important aspect of understanding one's local economy. By identifying industries that one's region is particularly competitive in, they are in a position to focus economic development efforts on areas most likely to be successful.

Shift-share analysis is used to analyze the composition of the growth of the Southern United States in the 1980s. This technique makes it possible to separate growth into three components: National growth, industrial structure and regional competition (10), (16). The analysis is primarily used to decompose employment changes within an economy over a specific period of time into three contributing factors:

* Growth that is attributable to growth of the national economy. ([G.sub.N])

* Growth that is attributable to the mix of faster or slower than average growing industries. ([G.sub.M])

* Growth that is attributable to the competitive nature of the local industries. ([G.sub.L])

The technique facilitates comparisons between the local economy of interest and the larger economy. Specifically, shift-share helps analyze whether particular local economy has witnessed faster or slower growth rate in employment than the larger (national or state) economy has observed. In this study, according to Table 2, we use value added data instead of employment data and interpret the results (8), (9).

Table 1: Value added data in Iran during the years 2000-2005 (8) Activity 2000 2005 Change (%) Agriculture, hunting, forestry 73,170,015 166,289,955 56.00 Fishing 1,932,866 3,642,429 46.93 Mining 113,838,492 431,840,431 73.64 Industry 90,472,790 241,142,426 62.48 Water supply, electricity and 13,410,924 42,276,918 68.28 natural gas Building 28,257,698 88,035,086 67.90 Whole sale retailing 90,155,392 267,919,920 66.35 Hotel restaurant 6,070,202 15,916,865 61.86 Transportation communication 44,560,536 130,020,817 65.73 storing Financial service 11,289,569 60,985,975 81.49 Real estate, business 72,902,639 202,941,991 64.08 Public administrative, city 35,932,155 92,631,629 61.21 services Education 22,433,223 83,667,701 73.19 Health 17,356,802 62,001,931 72.01 Other 7,969,701 27,917,746 71.45 Total 629,753,005 1,917,231,819 67.15 Table 2: Value added data in East Azerbaijan during the years 2000-2005 (8) Activity 2000 2005 Change (%) Agriculture, hunting, Forestry 3,951,837 8,501,922 53.52 Fishing 3,053 22,327 86.33 mining 60,260 129,961 53.63 Industry 5,073,780 14,635,725 65.33 Water supply, electricity and 739,191 2,481,393 70.21 natural gas Building 1,054,492 3,773,306 72.05 Whole sale retailing 5,562,785 13,891,946 59.96 Hotel restaurant 231,686 616,093 62.39 Transportation communication 1,599,885 3,765,880 57.52 storing Financial service 310,175 1,361,434 77.22 real estate, business 2,934,175 7,065,094 58.47 Public administrative, City 1,292,319 3,368,340 61.63 services Education 1,083,100 4,532,848 76.11 Health 708,214 2,720,861 73.97 Other 302,188 898,024 66.35 Total 24,907,140 67,765,153 63.24 National growth share ([G.sub.N]): This component measures the amount of value added created locally due to national economic trends. To calculate this component, we multiply the base value added for each industry by the national average value added growth rate over the time period. So we have (3), (20):

[G.sub.N] = V[A.sub.iL][V.sub.N]


[VA.sub.iL] = Each industry value added in province

[V.sub.N] = National value added growth rate

According to Table 3, the overall national growth component shows that, if the local economy was identical to the national economy, then the province should have grown by 16725893 units between 2000 and 2005. However, the data from Table 1 shows that the province added 42858013 units during this period. This suggests that the province is performing better than the national average. The other components of the shift-share analysis can help identify why this happened.

Table 3: National...

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