Estimating the Productivity of Large Scale Industries in Khuzestan

Proper estimation of productivity of capital is necessary for promotion of efficiency. In order to estimating this index in large scale industries of Khuzestan during 1971-2004, there is need to estimate the related production function. To this end, Cob-Dauglas, Debertin, Transental and Translog functions with explanatory variable such as capital stock and labour have been estimated. Since data on stock of capital and homogenous labour in large scale industries of Khuzestan were not available, we first generate these data. To generate stock capital data, the exponential method and to homogenate data on labour, the table of base salary of government employees have been applied. The estimation process showed that Translog production function is most proper function. Productivity of capital has been estimated on the bases of this function. The findings of the research indicate that the productivity of capital has been declined due to Iran-Iraq war. After a considerable decline in 1981, despite the continuity of war and its damage to capital stock, productivity of capital gained a relatively high growth rate, and then faced with another decline during 1991-1995. Since then it has a moderate rate of growth.