Examining the Effects of R&D on Labor Productivity Growth in Iranian Small Industries

Regarding the importance of research and development (R&D) expenditure on industrial firms’productivity growth, in this study, the R&D expenditure effectiveness has been examined on the labor productivity growth rate of small industries during 1994-2013. In order to estimate the models, the dynamic panel data method and Generalized Method of Moments(GMM) estimators are used. The results show that the all R&D expenditure indicators which considered have positive and significant effects on the labor productivity growth. In other word, spending in sectors such as: R&D ,laboratories, buying and updating software and training workshops for employees of small industries can be effective in labor productivity growth rate positively and significantly. Furthermore, the effect of total R&D expenditure on labor productivity growth has been estimated positive, significant and equal to 16.07 percent.