Fuzzy Estimation of Combined Depreciation Index for Selected Developing Countries

Although depreciation is a crucial factor in economic growth models, little effort has been made to estimate depreciation rates. In this study, we attempt to estimate integrated fuzzy indicators for depreciation rates in 21 comparable developing countries. In the framework of fuzzy logic, first, we combine ten related variables to obtain four depreciation indicators, namely human, social, physical, and natural capital. Then the four indicators are combined to obtain an overall depreciation rate. The results indicate that remarkable gap exists among developing countries. The overall depreciation rates are at the highest level in the CIS countries (circa 0/7) and at the lowest level in some of the developing European nations (circa 0/4). Due to lack of information, the exact estimation of a combined depreciation indicator seems impossible for Iran; nevertheless, we estimate a minimum boundary for this country, which indicates the dismal situation of capital preservation in Iran.