An Analysis of Total Factor Productivity Convergence of Industry Sector in Iran Provinces



The convergence hypothesis maintains that an economy whose productivity lags behind other economies has a potential to grow faster. In other words, this economy can experience faster economic growth through absorbing, accepting, and using available technology experience.
In this study, we have examined the relationship between TFP of industry sectors and regional convergence in Iran's provinces during the time-period 1369-1381. We have measured TFP by using Divisia index. Then, have examined TFP convergence hypothesis by using the Bernard-Jones catch-up model and panel data approach. The empirical analysis shows that all industries have experienced convergence across Iran's provinces in this time-period. We find evidence of conditional convergence in all industries except for wood industry – which shows evidence of absolute convergence. In addition, by using TFP standard deviation we find no evidence for sigma convergence.
JEL classification: O40, O47, R11