Estimating the Effects of Human, Physical and Social Capitals on Total Factor Productivity (Case Study OF Iran)

The production of a country can be achieved by accumulation and interaction of three kinds of capital. First, physical capital through improvements in quality of tools and machinery and increases in labor productivity and thereby improve welfare, Second, human capital that will be realized in the form of skills, education and training; and Third, social capital that facilitate, expedite and reduce the cost of economic exchange and thus increase the productivity. Thus, using ARDL model for the period of 1992-2009, this paper, examines the effect of variables: growth rate of gross fixed capital as an indicator of physical capital, the rate of literacy (literacy and education coverage) as an indicator of human capital and international risk index (ICRG) as an indicator of social capital on total factor productivity. Results show that physical capital has no significant effect on productivity, but human and social capitals have positive and significant effects on productivity both in short-run and long-run.