Measuring the productivity of capital in the industrial sector of Sistan and Baloochestan State, Iran

Abstract

This working paper strives to measure analyze and the productivity of capital in the industrial sector in the case of the State of Sistan and Baloochestan over the period 1982-2009. Three production functions (Debertin, Cobb-Douglas and Transcendental logarithm (Translog)) are estimated by relevant variables such as labor, capital and GDP. Akaike, Schwarz information criteria and LR test indicate that the Cobb-Douglas model should be preferred. In order to avoid a spurious regressing Johansen test detects a cointegration. According to this detection the cointegration term (-0.46) indicates that the deviation from long-run equilibrium is rectified gradually through a series of partial short term adjustments after or so two years.The results of this function reveal that there's been a diminishing trend in productivity of capital since 1982.So it demonstrates the lack of attention to capital productivity. Thus we can conclude that Sistan suffers from the absence of comprehensive strategy and segregation between trade and production policies.