Identifying the Effect of Research and Development on Total factor Productivity of Iranian´s Manufacturing Sector: 2001-2007

Farhad KhodadadKashi, Mahdieh MehdizadehShahi

Abstract


This paper is to investigate the effect of research and development on total factor productivity at the level of manufacturing sector of Iran during 2001-2007. We have used translog production function. The result indicate that research and development has a positive and insignificant impact on productivity. We find that the production function is not a cob-douglas one and also the return of scale in manufacturing sector of Iran is increasing. This insignificant relationship can be explained by the gap of R&D expenditure ratio between Iran and other countries. According to the little R&D expenditure impact on productivity in manufacturing sector, Policymakers must pay more attention on R&D activities in Iran.

 

Keywords: Research and Development, Total Factor Productivity, Manufacturing sector, Panel Data, Translog production function


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DOI: http://dx.doi.org/10.5296/ijld.v3i2.3611

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