The Effect of the Different Kinds of Capital on Economic Growth of Selected Provinces of Iran

Abstract

This paper has studied the role of physical, human, and social capital on the economic growth of 20 selected provinces of Iran by using the augmented augmented-Solow model expanded by Ishi and Swada. Mankiw, Romer, and Weil regression equation derived from the research model is specified according to two classes of unit root tests for the panel models in two forms and is estimated by the generalized method of moment for dynamic panel data (GMM/DPD) and orthogonal deviation technique. The results of the estimation of the first form of regression analysis indicate that 1% increase in growth rate of national saving leads to 0.57% increase in growth rate of per capita gross domestic product (GDP), 1% increase in the number of university students (as representative of human capital saving) leads to 0.035% increase in per capita GDP growth rate, and 1% increase in growth rate of closed cases of returned checks (as representative of negative social capital saving) leads to 0.038% decrease in per capita GDP growth rate. The results of the estimation of the second form of the regression analysis confirm the role of three factors of physical, human, and social capital on the economic growth of studied provinces.JEL Classification: O11, H54, R10