The Effects of an Increase in the Investment and the Total Factor Productivity of the Mining Sector on the Value Added and Export of Different Economic Sectors in Iran

The mining sector is able to accelerate the economic growth and development in countries by providing raw materials of production, employment, value added and tax revenues. This is possible by adopting correct policies in this sector and through understanding its importance in the economy and assessing the effects it may have on the other economic sectors. In this regard, this study by using a dynamic computable general equilibrium model and social accounting matrix (SAM), analyzes the effects of an increase in the investment and total factor productivity of the mining sector on the value added and export of economic sectors in Iran. According to the findings, an increase in the mining sector`s investment, positively affects the value added and export of all economic sectors in Iran. In addition if the total factor productivity and the investment of the mining sector increase simultaneously, by assuming the stability of the other conditions, the resources including the labor force and capital will be absorbed and reallocated from other sectors to the mining sector. Although according to the backward and forward spillover effects, the value added and export of the other sectors in comparison to the basic scenario will increase, but the growth of the value added and export of the mining sector will be far more than the other economic sectors of the country. The results also reveal that the development in the mining sector in Iran has the least effect on the agricultural sector and the most effect on the energy sector