Investigating the role of hidden economy in the future cities of Iran (The case: Baneh city, Iran)

Abstract The purpose of this paper is to investigate informal cross border trade and its effects on the border city of Baneh, Iran. This is a descriptive- analytical research and the data obtained from documentary data sets, interviews and observation. Finding show that political conditions and governmental policies of the western neighborhood country (Iraq), political and social conditions in the Kurdistan province (Iran) as well as mountainous and impassable lands around the studied city, cause to commodity smuggling to develop. Smuggling creates many jobs and has made a lot of profit for those who involved in this illegal trade. Investments in smuggling by the participants led to construction of large warehouses, shopping centers, hotels, restaurants and establishment of transportation companies. Offering smuggled commodities at relatively lower price, cause commercial tourism to be common in the city. These are all contribute municipality of Baneh to be benefited from plenty incomes from construction permits, urban duties and taxes so that the it was able to develop urban services, facilities and infrastructure. Consequently, thanks to commodity smuggling, the border city being developed constantly and its population increase rapidly