Measurement and Analysis of factors affecting the Total Factor Productivity Growth of Iran Economy Based on Solow's Residual Factor Method

This study has been measured and analyzed factors influencing the Total Factor Productivity (TFP) in Iran economy. These factors were Human Capital, Economic Restructuring, Capital Structure, Demand Intensity and Technical Progress. Experimental studies using the econometrics techniques is done in Iran and it showed that, capital structure and technical progress (R&D), have a positive effect on total factor productivity. But this paper using different method i.e. Solow residual method, has been measured the effective factors on Total Factor Productivity. The results which are for the years of 1991-2006, show that human capital, capital structure and demand intensity perform the most positive impact on the total factor productivity growth. In contrast, not only the technical progress plays the role of inhibitors in the growth of TFP, but also, structural changes in different economy sectors and lack of efficiency in resource allocation in each section have a negative advantage on total factor productivity growth.