1. Introduction

Urban dysfunctional areas, as epicenters of crisis, have created numerous economic, social, and physical challenges for developing cities. Khorramabad, as a significant center in western Iran, faces over 263 hectares of dysfunctional fabrics suffering from poor livability indicators. In recent decades, the urban regeneration paradigm has shifted from purely physical approaches to sustainable regeneration focusing on economic components. Based on the Asset-Based Community Development (ABCD) theory, household economic stability and local employment opportunities are the primary foundations for enhancing quality of life and livability. This study aims to analyze the impacts of sustainable economic-driven regeneration on enhancing livability indicators in Khorramabad's dysfunctional areas, considering institutional sustainability and governance as a mediating variable.



2. Methodology

This research is descriptive-analytical in nature and applied in purpose. The statistical population included two groups: experts (30 individuals) and residents of Khorramabad's dysfunctional fabrics. Using Cochran's formula, the sample size for citizens was determined to be 200, selected through stratified random sampling. The data collection tool was a researcher-made questionnaire, validated through the Content Validity Ratio (CVR > 0.70) and reliability confirmed by Cronbach's alpha (> 0.80). For data analysis, the Fuzzy DEMATEL technique was first employed to identify causal relationships among variables. Subsequently, Structural Equation Modeling (SEM) using Smart-PLS 3 software was applied for hypothesis testing and final model fitting.

3. Results

Fuzzy DEMATEL analysis revealed that among economic regeneration indicators, "employment opportunities and local businesses" have the highest impact on other variables. In the SEM section, all factor loadings were significant at a 95% confidence level. Findings showed that economic regeneration has a direct and significant effect on urban livability (path coefficient = 0.68). Furthermore, managerial sustainability, with a factor loading of 0.801, was identified as a strong mediating variable strengthening the link between economic interventions and livability outcomes. Among livability indicators, "residential satisfaction" and "environmental quality" showed the highest correlation with improved household economic status.

4. Discussion

The findings of this study emphasize that in middle-order Iranian cities like Khorramabad, livability is a result of economic empowerment rather than physical aesthetics. These results align with international researchers such as Chen (2024) and Wang (2023), who highlight the pivotal role of micro-economics in neighborhood sustainability. The primary distinction of this research lies in highlighting the role of "managerial sustainability," demonstrating that even with financial resource injection, regeneration will not lead to tangible livability results without transparent governance and resident trust. The prioritization of indicators showed that access to urban services leads to satisfaction only when accompanied by improved purchasing power and local capital sustainability.

5. Conclusion

Ultimately, it can be concluded that the economic regeneration model in Khorramabad must move from a "project-oriented" to an "institution-oriented" and "human-centered" approach. Enhancing livability in dysfunctional fabrics requires integrating employment policies with physical improvement plans. Urban policymakers should focus on creating tax incentives for small local businesses and strengthening intermediary institutions to encourage public participation. This study suggests that the operational model of regeneration in similar cities should consider managerial sustainability as a prerequisite for any economic intervention.

1. Introduction

Urban dysfunctional areas, as epicenters of crisis, have created numerous economic, social, and physical challenges for developing cities. Khorramabad, as a significant center in western Iran, faces over 263 hectares of dysfunctional fabrics suffering from poor livability indicators. In recent decades, the urban regeneration paradigm has shifted from purely physical approaches to sustainable regeneration focusing on economic components. Based on the Asset-Based Community Development (ABCD) theory, household economic stability and local employment opportunities are the primary foundations for enhancing quality of life and livability. This study aims to analyze the impacts of sustainable economic-driven regeneration on enhancing livability indicators in Khorramabad's dysfunctional areas, considering institutional sustainability and governance as a mediating variable.



2. Methodology

This research is descriptive-analytical in nature and applied in purpose. The statistical population included two groups: experts (30 individuals) and residents of Khorramabad's dysfunctional fabrics. Using Cochran's formula, the sample size for citizens was determined to be 200, selected through stratified random sampling. The data collection tool was a researcher-made questionnaire, validated through the Content Validity Ratio (CVR > 0.70) and reliability confirmed by Cronbach's alpha (> 0.80). For data analysis, the Fuzzy DEMATEL technique was first employed to identify causal relationships among variables. Subsequently, Structural Equation Modeling (SEM) using Smart-PLS 3 software was applied for hypothesis testing and final model fitting.

3. Results

Fuzzy DEMATEL analysis revealed that among economic regeneration indicators, "employment opportunities and local businesses" have the highest impact on other variables. In the SEM section, all factor loadings were significant at a 95% confidence level. Findings showed that economic regeneration has a direct and significant effect on urban livability (path coefficient = 0.68). Furthermore, managerial sustainability, with a factor loading of 0.801, was identified as a strong mediating variable strengthening the link between economic interventions and livability outcomes. Among livability indicators, "residential satisfaction" and "environmental quality" showed the highest correlation with improved household economic status.

4. Discussion

The findings of this study emphasize that in middle-order Iranian cities like Khorramabad, livability is a result of economic empowerment rather than physical aesthetics. These results align with international researchers such as Chen (2024) and Wang (2023), who highlight the pivotal role of micro-economics in neighborhood sustainability. The primary distinction of this research lies in highlighting the role of "managerial sustainability," demonstrating that even with financial resource injection, regeneration will not lead to tangible livability results without transparent governance and resident trust. The prioritization of indicators showed that access to urban services leads to satisfaction only when accompanied by improved purchasing power and local capital sustainability.

5. Conclusion

Ultimately, it can be concluded that the economic regeneration model in Khorramabad must move from a "project-oriented" to an "institution-oriented" and "human-centered" approach. Enhancing livability in dysfunctional fabrics requires integrating employment policies with physical improvement plans. Urban policymakers should focus on creating tax incentives for small local businesses and strengthening intermediary institutions to encourage public participation. This study suggests that the operational model of regeneration in