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Paper Information

Journal:   IRANIAN JOURNAL OF TRADE STUDIES (IJTS)   Spring 2001 , Volume 5 , Number 18; Page(s) 29 To 68.
 
Paper: 

THE EFFECT OF FOREIGN (THROUGH FOREIGN TRADE) AND DOMESTIC R&D ACTIVITES ON THE IRANIAN TOTAL FACTOR PRODUCITVITY

 
 
Author(s):  KOMIJANI AKBAR, SHAH ABADI ALI
 
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Abstract: 
Economic growth depends on the utilization of resources, the rate of population growth, the saving rate, the mode of organization of economic activity, technological know how, and etc. The aim of this study is to assess the role of domestic R&D expenditures and foreign R&D expenditures through the foreign trade on total factors productivity in Iran.
Reccent theories of economic growth treat commercially oriented innovation in response to economic incentives as a major engine of technological progress and productivity growth. In this view, innovation feeds on knowledge arising from cumulative research and development (R&D) experience on the one hand, and it contributes to this stock of knowledge on the other hand. Consequently, and economy"s level of productivity depends on its cumulative R&D effort and on its effective stock of knowledge, with the two being interrelated.
tn a world with international trade in goods, a country"s productivity depends on the R&D of its trade partners as well as on its own. Therefore, in this research we study the extent to which total factor producitvity depens on domestic and trade partners R&D capital stocks. Wc cumulate domestic R&D expenditure as a proxy for the R&D capital stock and construct a trade partners R&D capital stock as the import wcighted sum of the trade partners R&D capital stock. We apply Johansen cointegration methodology in the estimation during the preiod 1968-1999. The partners of Iran in this study consist of 21 OECD countrics and United Arab Emirates.
We find that both domestic and foreign R&D capital stock have important effects on total factor productivity and ecnomic growth. Estimated coefficient on the interaciton of trade with the foreign R&D capital stock is positive, then the effect of foreign R&D on domestic productivity is larger the more open the economy is to foreign trade, and the effect of foreign trade on productivity is larger, the larger is the foreign R&D capital stock. Similarly for the interaction of human capital with foreign R&D: if, then the effect of foreign R&D capital stock on productivity is larger the more educated is the domestic labor force, and the effect of education on productivity is alrger, the larger is the foreign R&D capital stock.
 
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