The Effect of Investment Infrastructures on Iran’s Economic Growth

Abstract

The role of capital and investment in the process of economic growth and development has mentioned in many economic theories. Shortage of investment in any country is an incentive for efficient use of investment to increase the economic growth. In this paper, we compare the productivity of investment in four economic sectors namely, agriculture, petroleum, industry and services in Iran. For this purpose, we use incremental capital output ratio at first and compute it for these sectors. Then we use an endogenous growth model to assess the impact of investment in these four sectors on economic growth. Our results show that productivity of investment in petroleum and agriculture is higher that industry and service.