The Study Examining the Effect of Research Activities on Economic Growth: The Case of Iran

The education system in every country is a regular process and each year a big part of government budget and also private investments are allocated toward this system. In addition, some of the best years of every human are spent in schools and under education. Today, the economic effects of research are accounted as very important, because the relationship between level of education and income is proved to be positive. It means that educated people, in equal situation, will earn more money. More research makes people more skilled and these skills would lead to more production and service. So, in this study we will survey the relation between educated labors and economic growth in Iran. We showed that there's a long term relationship between these two, which is a positive and meaningful relation. In this study, we use production function (Feder, 1983), and also using auto regressive distributed lag (ARDL) co integration method, we will survey this long term relation, error correction model (ECM) and their dynamism effects. Most of past studies have used partial data (data from a certain time period); the problem with this method is that an average relationship is used, hence it won't yield any information more than what we just need. Only the studies by Love (1987) and Wilson (1994) have used time series in surveying this relationship. But, because most of the economic time series are non stationary, there is the possibility of artificial regression. In order to avoid the consequences, unit-root tests (Phillips-Perron & Augmented Dickey-Fuller) is used. The importance of research in human life is so obvious that its role is prominent in every aspect of our life and is rarely doubted. More research makes people more skilled and these skills would lead to more production and service. This process will lead to an increase in producer's income, consumer's welfare, and consequently more Gross Domestic Product (GDP) and faster economic growth. Also, the more investment on research and development by a country, the more opportunities will arise and this will lead to more power in production and more income. Thus, these investments will bring about distributive effects and social justice. Also, considering the fact that technology transfer increase the pace of development in industries and pave the way for it, investment on research will lead to more industrial power and faster economic growth, undoubtedly. Iran is a developing country and always has tried to work toward the goal of a stable and long term economic growth, so any study on this matter is crucial for the country's economic growth. Besides that, because of country's population crisis and government's and families' attention toward investment on youth, and the importance of human resources in economic growth, it's very important to invest on youth education and its role on Iran's economic growth. Since research is infrastructure development and it is the main basis for moving towards sustainable development, is described the importance of quality human resources in economic growth by endogenous economic growth models. Here, we have a hypothesis which: research has positive effects on country's economic growth. We use average years of education of a person as an index for human resource research. Placing Human Capital in Production Function in Iran: Education, experience and health are three wings of human capital, and among these, education plays the main role. In contemporary literature of economics, "educational attainment" is used as an expression for educational wing of human capital. Human capital which is produced by education is an important element of development and economic growth. In order to acquire human capital, many indicators like (school) registration rate, literacy rate , population of researchers, engineers and technicians, education costs and average years of education (in school). Between these indicators, average years of is probably more important. In order to estimate the average years in school, lots of research has been done and from these, studies of Barro and Lee (2000) are the most detailed ones.