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The productivity trend in Iran: evidence from manufacturing firms

Rahmati, M. H ; Sharif University of Technology | 2018

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  1. Type of Document: Article
  2. DOI: 10.1111/ecot.12200
  3. Publisher: Blackwell Publishing Ltd , 2018
  4. Abstract:
  5. Iran has been experiencing slow growth for the past ten years. Using plant-level information, we show that on average firm-specific productivity in manufacturing sectors declined at the rate of 2.6 percent annually, while large top decile firms experienced a modest growth in productivity between 2005 and 2011. We decompose this trend and find that within-plant variation is its main driving force while the between firms and industries component is insignificant. We test several alternative explanations that may contribute to these negative trends. We show that the subsidy reform had a negative effect, while privatization seems to have had no effect. Private management not affected on productivity growth, while firm size is associated with higher productivity growth. Also, we find that productivity growth decreases with the energy intensity of the firm. We also find that R&D expenditures significantly increase productivity growth, while the R&D sales ratio is about 0.5 percent in manufacturing sectors, which is about one-fifth of the world average. A one-percent point increase in R&D expenditures increases productivity growth by 0.5 percent. © 2018 The Authors Economics of Transition © 2018 The European Bank for Reconstruction and Development Published by Blackwell Publishing Ltd
  6. Keywords:
  7. Firm productivity trend ; Iran economy ; R&D
  8. Source: Economics of Transition ; 2018 ; 09670750 (ISSN)
  9. URL: https://onlinelibrary.wiley.com/doi/full/10.1111/ecot.12200