The role of environment and social capitals in Iranian economic growth

Abstract

To date, only labour force and physical capital have been considered as factors of production in neoclassical growth patterns. But recently, the creation of differences in the level of production and income among countries, beyond the difference in physical capital, has led to more dimensions of the variable of capital being investigated. These explorations led to the arrival of variables of human and social capitals into a growth model. This study aimed to analyse the role of various types of capital in the Iranian economy. Hence, the neoclassical growth model and the data of period between 1974 and 2012 were used. Types of capital were added to physical capital, including human, social, and environmental capitals. The environmental capital was considered as carbon dioxide emission costs. The variables representing social capital included access to the internet as well as access to the telephone. In the case of human capital, three variables were used including literacy rate, enrolment rate in elementary school, as well as the students number. It was also assumed that technology, in addition to the workforce, would appear in the form of physical capital. The findings exhibited that physical capital was the most important factor in the growth of Iranian economy. However, a very small role was played by the variables of human and environmental capitals. The role of social capital has been estimated to be relatively acceptable and positive, which is about one- third to one-quarter of physical one.

Keywords

• economic growth
• social capital
• environmental capital. jel classification: o14
• o45
• r2