Knowledge and Expansion of Industry in Iran

The evolution of economic growth and development theories has led to considering the investment in knowledge and new ideas rather than in physical capital and employment of labor. Concentrating on knowledge-based economy requires knowing the resources of growth in knowledge so that provide their investment basis and financial allocation. Regarding to the importance of industry in economic development, this paper investigates the impact of knowledge inputs on production and sale of Iranian industries. By using an endogenous growth model and panel data in period 1382-86, it is found that enhancement of education level and R&D expenditures leads to growth of industry output but it is just R&D expenditures that has positive impact on level of sale. Skilled labors have been negatively correlated with both of dependant variables.