The Effect of R&D on Economic Growth in Iran

This paper examines the short- and long-run effects of domestic Research and Development (R&D) and foreign R&D (throw the channels of capital goods import and foreign direct investment) on Iranian economic growth using of endogenous growth models and Bounds test approach to level relationship over the period of 1351-1386. Bounds test approach results confirm the existence of long-run relationship among variables in both growth models; where import R&D is considered from capital goods import channel and foreign direct investment channel، respectively. Based on Bounds test results، long-run relationship among variables in the second model is stronger than the first one. Our results show that Iran has not been successful to attract foreign R&D from capital goods import channel. Moreover the long-run effect of domestic R&D and foreign R&D from the foreign direct investment channel is positive and can be accepted at 5 percent significance level.