The effects of Information and Communication Technology (ICT) on the Total Factor Productivity (TFP) in Iran

Analysis of ICT impacts on the economic performance has been started since 1990s. Researches have found that ICT have remarkable effect on TFP in both developed and developing countries. The aim of this paper is to investigate the impacts of ICT on the TFP in Iran using Vector Error Correction method during the years of 1966-2005. Findings indicate that non- ICT capital and ICT per capita have positive effect on the TFP. The elasticity of TFP relative to non- ICT and ICT capital per capita is 0.58 and 0.02 respectively. Human capital has positive effect but not stable. The elasticity of TFP relative price level and saving over national income is -0.07 and 0.08 respectively. So, the non ICT, ICT and human capital, saving accumulation have positive effect and inflation has negative effect on the TFP. In addition, there is a causality relationship from descriptive variables on the TFP in short run and long run.