Background and Problem Statement: Resource abundance and the accumulation of industrial capital in cities do not inherently guarantee sustainable spatial and social development. In the absence of place-based institutional capacity, capital flows—rather than enhancing the quality of life—lead to a local-scale abundance paradox. Conventional urban planning, dominated by the physicalist and project-oriented logic of master and detailed plans, has fueled spatial maladaptation, the undisputed dominance of vehicular transportation networks over historic neighborhood structures, and ultimately, the fragmentation of social cohesion.

Objectives: Aiming to theoretically explain the “underdevelopment trap” and “institutional lock-in” within the context of industrial-mining cities, this research investigates how potential economic capacities transform into spatial erosion. The present study seeks to analyze the causal relationship between industrial proximity and place-based underdevelopment within the framework of the mediating quality of urban planning institutions.

Innovation: The foundational innovation of this paper is introducing the dominance of physicalist logic over the urban planning system as the primary mediator in converting wealth into underdevelopment. Relying on abductive reasoning and utilizing Sirjan as a diagnostic case, this study coins and formulates novel concepts such as the “anti-neighborhood transformation of resources” and “anti-place-based urbanization” for the analytical generalization of this phenomenon.

Conclusion: The analysis of findings within the historical context, bazaar, and adjacent neighborhoods of Sirjan reveals that resources are not inherently obstacles to development; rather, their absorption into the reductionist logic of physicalist, land-based, and project-oriented planning not only fails to foster development, but also generates a destructive cycle of spatial organization decay, decline in identity and place quality, neighborhood collapse, spatial fragmentation, peripheral sprawl, and public space degradation alongside land speculation. Escaping this path dependence requires a paradigm shift in planning methodology toward multidimensional and context-sensitive approaches. In this regard, corporate social responsibility (CSR) funds should not become the drivers of disjointed physical projects; rather, their allocation must first serve to transform the methodology and approach of urban planning as the foremost priority of urban development, after which any resource allocation must be conditioned upon tangible developmental outcomes such as enhanced neighborhood cohesion, urban legibility, livability, and spatial justice.