The Effects of Infrastructure on the Economic Growth of the Main Sectors of the Economy of Iran’s Provinces

Abstract

D

evelopment of social and economic infrastructure in every region is of the basic requirements of economic growth. Infrastructure stimulates economic activity, enhance the productivity of private sector's inputs, improve economic performance and thus sustainable economic development, enhancing the social welfare and better income distribution. Since the different kind of infrastructure has different effects on the sectors of the economy and then on regional development, examining the effect of infrastructure on regional economic development in various economic sectors for policymakers and planners is of particular importance. In this regard, the production function for different sectors (industry, services and agriculture) for the 30 provinces of Iran for the period 2007-2013 is estimated. Production function by the Panel Corrected Standard Errors (PCSE) method is estimated. Results show that social and economic public infrastructure has a positive impact on the economic growth of these sectors. Furthermore, the result indicates that the impacts of different kinds of infrastructure are different on various sectors of the provinces. That is the impact of social infrastructure on industrial and service sectors are more than an economic infrastructure. On the other hand the economic infrastructure has more effects on the agricultural sector compared to other infrastructure.