The Effect of Capital Stock Increase on the Productivity Increase in Industrial Firms of Khorasan Razavi Province (2003-2007).

The purpose of this paper is to investigate the relationship between capital stock and increasing the productivity of labor and total factor productivity (TFP) in industrial groups of Khorasan Razavi province from 2003 to 2007. In order to this first, the available literature in this area and the importance of productivity was reviewed, also the history of productivity in Asia and the situation of industry in Khorasan Razavi province was briefly studied from different aspects. Then capital stock, labor force engaged in industrail groups of the province and labor and total productivity were introduced as the variables of the research. Finaly, after estimating the capital stock of the industrial groups that were specified using a proper model, the hypotheses of the research were tested with imploying panel data models. The obtained results show that there is a positive and statistical significant relationship between increasing capital stock and labor productivity and between capital stock and total factor productivity (TFP) in the period of study as well.