Analysis of the Long-term Effects of Human Capital and Research and Development on Iran's Economic Growth, 1967- 2007

Education and research are important factors in the process of growth and economic development. This article aimed to investigate the effect of physical capital, human capital and research and development (R&D) on Iran's economic growth. For the analysis, data from 1969 to 2007 and, augmented of the Solow model were used. For a dynamic analysis, Autoregressive Distributed Lag Model (ARDL) was employed. After long-term relationship was confirmed by Fstatistic test, long-term coefficients were estimated. The result showed positive and statistically significant effect of physical capital, human capital and R&D on growth. The estimated coefficient of Error Correction Model equaled 0.33 showed that in each period 33 percent of the imbalances were adjusted towards the long–term equilibrium.