The role of human capital in the industrialization of Iranian economy; Applications of fuzzy logic and GMM in time series

One of the factors affecting the industrialization of the economy is human capital. In many previous studies, education has been used as a traditional index of human capital, but in addition to education, human capital is also affected by other aspects such as skills and health. Given that industrialization is a dynamic process, the present study has investigated the effect of human capital on industrialization in Iran during 1981-2019 by using the Generalized Moment Method in the context of time series and also applying traditional and comprehensive indicators of human capital. In this regard, using fuzzy logic, the comprehensive index of human capital has been estimated by considering three aspects of education, skills and health. The results show the significant growth of human capital during the study period. The results of estimating the model using the traditional index of average years of education showed the insignificant and inconsistency of coefficients and the estimation results using the comprehensive index of human capital showed that the promotion of human capital level leads to increasing value added of industry as a percentage of GDP. Also, the effect of the first lag of industrialization, labor force participation, capital stock and technical progress has been evaluated positively and significantly.