An Investigation of Productivity Gaps of Industrial Crops in some Iranian Provinces

The issue of convergence or divergence of productivity has important policy for regional poverty reduction and increasing standards of living. If productivity converges to a common level without intervention, there will be little need for explicit policies in lagging regions to promote the catch up. On the other hand, if productivity undergoes a divergence trend, then explicit policies would be needed to prevent further lagging of TFP and standard of living. Considering the importance of this subject, this paper tries to find out whether the different provinces in Iran have been well managed in industrial crop production (irrigated cotton, dry-fed cotton as well as sugar beet) to narrow their productivity gaps? The results showed that average TFP growth of irrigated cotton lies between -0.3 percent in Semnan province and 8.2 percent in Fars province. All sugar beet producing provinces, except Ardebil, showed positive productivity changes, with Isfahan province exhibiting the highest TFP growth rates during the last two decades. Also, two provinces – Mazandaran and Golestan- experienced positive and negative growth rates in dry cotton production respectively. The results of convergence test indicated that, out of 14 provinces of under consideration only five, namely: Ardebil, Kerman, Kermanshah, Khorasan and Yazd converge to the mean of irrigated cotton production while four provinces of: Isfahan, Khorasan, Ardebil and Hamedan converged to the mean of sugar beet production. Therefore, these provinces have been managed in a was as to make better use of new available technologies, thus reaching far greater productivity levels than the others. On the opposite, convergence cannot be accepted for the dry-fed cotton producer provinces.