Evaluation of Technological Change and its Impact on the Combination of Input and Scale of Production in Iranian Manufacturing Industries

Abstract

In this study, by employing a flexible cost function we calculate the technological change measure and total factor productivity and examine the impact of technology on the combination of input and scale of production in Iranian manufacturing industries. According to the results of technological change at the average data level, total production cost of industry has decreased by an amount of 0.49 percent during the period 1996-2009. All 23 studied industries have deviation from input technology. In addition, technological change has led to saving in raw materials and to an increase in the use of three inputs of labor, capital, and energy. The technological change is non-neutral and has led to changes in production scale and based on the technology scale bias, technological change has led to a decrease in optimal production scale.

Keywords

• industry
• technological change
• total factor productivity
• economies of scale