The Impact of Human Development Index on Economic Growth in Iran (Based on Markov - Switching Model)

In recent decades، the issues related to human capital and its impact on economic growth have been important. In this regard، the main objective of this study is to evaluate the impact of human development on economic growth in the period of 1971 -2012 in Iran. Therefore، according to the purpose of this research، firstly we calculated Iran’s human development index based on the UN definition and analyzedthe impact of human development index on economic growth by using Markov-Switching model. The main model of this study is determined by using the model of Lucas and Line (2004). To estimate the nonlinear relationship between human development and economic growth based on the likelihood function، MSI model with two regimes (prosperity or recession) was chosen from the different states of the Markov - Switching (MS) model. Changing the relationship between these two variables over time، is one of the most important characteristics of Markov – Switching method. Based on the results، human development has a positive impact in recession periods and negative impact in prosperity on economic growth in Iran. Also، stability of the first regime (recession) is greater than the second (prosperity).