Transmission Effect and Impact Effect of Urban Economic Growth

This paper seeks to establish the thesis that all round development over a sufficiently large area is not possible. Since, an increase in production has a two- fold effect while markets of some sectors located in specific regions are stimulated, invariably there is a depressing effect on some other regions or sectors. There is thus, rarely a balanced growth either over all regions or over all sectors. To counter balance this tendency, as far as possible through mobility of labour and transfer of capital from one sector to another becomes necessary. A historical illustration with time series data for Iran of the middle east growing very fast as a whole at that time is given.