Investigation the effect of ICT and innovation on the total factor productivity in Iran’s industry sector

Abstract

The main purpose of this paper is to study the effect of TCT and innovation on total factor productivity () in Iranian industries from 1996-2014 by using panel data method. Amongst influential factors on productivity increase are ICT, innovation, and spillovers. Implementation of ICT like implementation of new technologies effects all sectors of economy. ICT is not only used as technology of production like traditional forms of capital but it course on increase in productivity and economic growth by substitution with other inputs. The statistical population of this survey is Iranian industries and the size of sample is 140 industries. The result of estimation indicates a positive effect from ICT on TFP. In this model the coefficient of ICT equal 0.02 which shows that a unit of increase in ICT, lead to 0.02 percent increase in TFP. Also we find that the coefficient of innovation (INNO), equal 0.04 which shows that a unit of increase in firm’s innovation, lead to 0.04 percent increase in TFP. Moreover the coefficients of LAB and INV are 0.01 and 0.003 respectively, which shows that a unit of increase in LAB and INV, leads to 0.01 and 0.003 percent increase in TFP.

Keywords: Information and communication technology (ICT), Innovation, Total Factor Productivity, Panel data.