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The Impact of Consuming Petroleum Products on Economic Growth and Regional Convergence in Iran

Author

Listed:
  • Teymur Rahmani

    (Tehran University)

  • Kolsoom Roshani

    (Bu Ali Sina University)

  • Masoume Emami Kalaee

    (Allameh Tabatabai University)

Abstract

One of important subjects considered in models of economic growth is convergence hypothesis. It posits that if different regions have identical levels of log-term equilibrium per capita GDP, the poor regions would have higher rate of per capita GDP growth than rich ones. Therefore the more poor regions would converge towards richer regions in terms of economic conditions. However, since determining factors for long term per capita GDP is not the same in all of regions, the conditional convergence is suggested. This hypothesis states that farer regions from long term per capita GDP would have higher rate of per capita GDP. Since determining factors on economic growth can influence on convergence process, the impact of consuming petroleum products as a determining variable on economic growth has been studied. The model of Barro and Sala-I-Martin was applied in order to examine convergence and the impact of consuming petroleum products on convergence and also reduction of regional inequality among Iran's provinces from 2000 through 2011. Results indicated that there is an unconditional convergence among Iran's provinces and also variables of gasoline, diesel, and Mazut (fuel oil) have significant impact on economic growth and lead to negative convergence among Iran's province. Hence, respecting these results it can be concluded that using energy subsides cannot reduce regional inequality.

Suggested Citation

  • Teymur Rahmani & Kolsoom Roshani & Masoume Emami Kalaee, 2016. "The Impact of Consuming Petroleum Products on Economic Growth and Regional Convergence in Iran," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 12(1), pages 14-24, February.
    • Handle: RePEc:dug:actaec:y:2016:i:1:p:14-24
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    References listed on IDEAS

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    Cited by:

    1. Anthony E. Akinlo, 2021. "Petroleum Consumption and Economic Growth Nexus in Nigeria: Evidence from Nonlinear ARDL and Causality Approaches," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 19(4), pages 819-844, December.
    2. Laurine Chikoko & Tawedzerwa Ngundu & Kennedy Kupeta, 2018. "Economic Growth and Electricity Consumption in a Multivariate Framework: A Case of Zimbabwe 1980 to 2016," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 14(5), pages 20-33, OCTOBER.

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