A Review on Research and Development Impacts on Iran's Industrial Sector Productivity

This research evaluates the theoretical and analytical role of domestic R&D bank, human capital as well as foreign R&D bank on total factor productivity (TFP) growth of Iran?s industrial sector. Since the research and development activities of Iran's industrial sector as compared to developed countries are little, just like other developing countries there could be hope for us that foreign R&D bank and their spillovers will have positive impacts on total factor productivity growth of this sector. It's all because attracting foreign R&D spillovers along with domestic R&D development activities will provide a more favorable ground to TFP growth. Therefore, this study investigates the direct impacts of foreign and domestic R&D bank (via the technology in importing capital and intermediate goods (and human capital on TFP growth of Iran's industrial sector during 1959-2006. The analytical results imply that, human capital and foreign R&D bank have respectively, the highest positive effect on TFP growth of industrial sector. While, in theory, domestic R&D bank also has a determinant role on TFP growth. But, by reason of low investment in research budgets and lack of demands as the base for research activities, the effect of domestic R&D bank on total factor productivity growth of Iran?s industrial sector has had little impact comparing to foreign R&D bank.