Impact of Smart City Composite Index on Economic Growth Evidence from Provincial Areas of Iran

Abstract Urban management can transform smart cities across various dimensions, enhancing resource efficiency and driving economic growth. This study investigates the relationship between combined smart city index and economic growth in Iran's provincial areas, using the Hicks neutral technological progress model and log-threshold regression. Due to limited time series data related to the components of combined smart city index in provincial areas of Iran, 2016 data for 31 provinces were used. Results show that Tehran, Khorasan Razavi, and Fars rank highest according to the combined smart city Index, while Lorestan, Semnan, and Kohgiluyeh and Boyer-Ahmad rank lowest. The study finds that the impact of the smart city index on economic growth varies with the smartness threshold of 0.0128. Below this threshold, a 1% increase in the index significantly boosts GDP per capita by 0.496%. Above the threshold, a 1% increase results in a 0.244% rise in GDP per capita. Generally, when the index is below the threshold, its effect on economic growth diminishes. This pattern also holds for capital per capita and aligns with theoretical discussions. JEL: R11, R10, O10, O18, O30