The Impact of Industrial Sector on Poverty Reduction in all Provinces of Iran

Abstract

This paper examines the impact of industrial sector on poverty reduction in all provinces of Iran. For this purpose, squared poverty gap index (FGT(2)) was first measured in the urban areas of provinces; Then the value added of those industrial activities that are carried out by ten or more employees are gathered at the ISIC 2-digit code level. Finally, using Panel-VAR approach, the impacts of industrial sector on poverty in all provinces of Iran were evaluated for the period (2004-2015). The results indicate that in those provinces which have high levels of productivity in industrial workshops, poverty intensity is low. Therefore, at high level of productivity of industrial workshops, there is a significant relationship between industry and poverty. The results also show that with regard to causal relationship, poverty is not the Granger-cause of industry growth; also, the added value shock of industrial activities had no impact on poverty at the moment of shock occurrence. Moreover, in the analysis of variance, the value added of industrial activities does not explain the as much of intensity of urban poverty as much. Therefore, the results of applying the panel-VAR approach indicate the small impacts of the value added of industrial activities with ten employees and more on the severity of urban poverty. These findings can be used in developing executive and research strategies.