Estimating Optimum Value of Investment and Human Capital in the R&D Sector of Iran Using an Augmented Endogenous Growth Model

This article intends to estimate the optimal value of investment and human capital in R&D sector of Iranian economy using an augmented endogenous growth model. To do so, two issues have been studied. First, an endogenous growth model in which investment in R&D is introduced as an independent variable has been expanded. In the framework of this model, in order to determine the optimal value of investment and human capital in R&D sector, we determined the optimal path. Second, using the optimal path and Iran’s economic data, the optimal value of human capital and investment in Iran’s R&D sector has been estimated. The results show that to be in a steady state with 8% economic growth, it’s necessary to allocate 0.7% of total human capital and 8% of national income to R&D sector. However, at the present, less than 0.3% of the human capital and less than 0.5% of national income is dedicated to R&D sector in the Iranian economy.