Growth inequalities are one of the important issues of urban and regional economies. The present study focuses on the Theil inequality index and regional statistics data of Iran during the years 2005 to 2013. This study measures the inequality and examines the effects of industrialization on it.
In this study, spatial econometrics has been used.
Theil inequality index analysis shows that the major share of growth inequality between regions is due to the neighborhood effects between provinces and the difference in productivity. The results show that economic growth of the provinces is convergent and industrialization in a particular province causes a divergence of economic growth. The effects of overflow lead to convergence of economic growth in the provinces.
Therefore, increasing investment in less developed regions can lead to convergence of economic growth in the provinces.