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Many developing countries in the 1950s, and 1960s adopted a growth centred strategy which was a centralised approach to development with the main focus on efficiency. But this strategy failed to improve the socio-economic situation of the majority of their rural population because it ignored the needs of the urban and rural economy i.e. agriculture, especially in commodities-based export countries. From 1970s onwards, the emphasis has shifted towards more a decentralised approach to development with a rural development bias. But the experience of different countries shows that with such a strategy the objective of equity is attained at the cost of efficiency and national growth. In both the centralised and decentralised approaches, the small towns and intermediate cities remain neglected. The researchers and planners have argued that in countries with an unbalanced settlement hierarchy, especially in the case of urban primacy, equity and efficiency could be achieved by promoting the development of smaller settlements which would integrate the entire urban hierarchy. To get the context for the empirical study, a literature review is undertaken. This examines the theoretical and empirical approaches to the study of development and urbanisation in developing countries. Then, the urbanisation process in Iran is discussed in detail, with particular reference being placed upon the socio-economic transition in the pre and post-Revolutionary era. The present research investigates the impact of development policies on urbanisation in Iran in general and at the provincial level in particular. The centralised development policy of the pre-Revolutionary period created severe regional disparities despite the availability of great wealth (oil) and undermined the peasant economy of the mass rural population. The most conspicuous consequence of this policy was rural-urban migration and rapid growth of urbanisation. This study investigates the impact and effect of such policy in an area where the dependency on agriculture is very high. The post- Revolutionaiy development policies tend to be decentralised and shown a greater concern with agriculture. Thus the research aims to evaluate the effect of a new decentralised policy on rural and urban development at the regional level in Mazandaran province. By closer study of Amol city, the research investigates the impact of rural prosperity on an intermediate city and its hinterland. The research has shown that although the new sectoral development (agriculture) decreased the overall economic gap between rural and urban areas, it has failed to prevent migration and the rapid urban expansion of small cities such as Amol.

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