The Effect of Internal R&D Capital Stock and External Capital Stock on Value added in Iran's Medium and Large Industries

Science and technology can have a major role in growth and creating value added of communities. Research and development are important economic issue that cause technological changes and therefore have a significant role in development of technology and increasing production capacities. Although recently developing countries have realized the importance of R&D، their production units are unable to invest more in R&D section. It is also believed that in the early stages of development، the existing technological gap between these countries and technology leaders decrease the success possibility of R&D efforts and as a result، these communities don’t have reasonable technological basis for innovation. So in the early stages of development، in addition to R&D efforts، import of capital goods can also be effective in developing technology and increasing production capacities of developing countries. In this study، the effect of internal R&D capital stock and external capital stock on value added of the Iranian medium and large industries is investigated over the period of 1994-2007 by applying panel data approach. The results indicate that internal and external capital stock، human capital and internal R&D capital stock have a significant and positive effect on added value of the Iranian medium and large industries during the mentioned period. The research findings have also revealed that although the number of labor force has a positive impact on added value of these industries، it is not statistically significant.