Measuring and Analyzing the Shares of Economic Growth Sources in the Mining Sector of Iran: A Neoclassical Growth Accounting Approach

TL;DR

This study measures the contributions of productivity growth and factor accumulation to Iran's mining sector growth from 1976 to 2006, highlighting the sector's role in broader economic development using a neoclassical growth accounting approach.

Contribution

It applies a neoclassical growth accounting method to quantify the specific shares of TFP and factor inputs in Iran's mining sector over three decades, providing new sector-specific insights.

Findings

TFP growth averaged 2.94% annually

TFPG contributed 56% to sector growth

Factor accumulation contributed 44%

Abstract

The purpose of this study is to measure the Total Factor Productivity (TFP) growth and determine the share of each of the economic growth sources in the mining sector of Iran. The time period of this study is 1355-1385 of the Solar Hijri calendar (roughly overlaying with the time period of 1976-2006 of the Gregorian calendar). In this paper, the shares of total factor productivity growth (TFPG) and factors' accumulations in the economic growth of the mining sector are estimated using a neoclassical growth accounting approach. Based on the estimated restricted Cobb-Douglas production function and the results obtained from the Solow residual equation, the annual growth rates of TFP were measured for each year. According to the findings, the average annual growth rate of TFP has been 2.94% during the time period of the present study. The other findings of this study indicate that the average contributions of TFPG, labor accumulation and capital accumulation in the economic growth of the mining sector have been 56%, 23%, and 21%, respectively, during the time period of the study. As such, it can be concluded that the policy of benefiting from available factors in the mining sector together with the policy of accumulating factors have simultaneously caused the value-added growth of this sector. Therefore, considering the desired performance of the mining sector in terms of its sizable productivity growth, it can be argued that the mining sector can aid Iran's economic development plans to achieve their assigned economic objectives, one of which is to increase the share of total factor productivity growth in economic growth.