Consideration the Effects of Water Sector Investment In Economic Development in Iran

Abstract

Energy is one of the most important influential factors on economic growth. Water is one of the main inputs for many other sectors. In this study, in order to see the effects of water sector investment from production function, we use economic time series database of national accounts in central bank, vice-presidency for strategic planning and supervision, and Iran water resources management co., which were gathered during 1980-2010. As economic growth and different sectors value added (agriculture, industry and mine, services, and petroleum sectors) variables used in empirical analysis was integrated of order one, employed Granger causality test. Results show for different sectors (agriculture, industry and mine, services, and petroleum sectors) in Iranian economy implies that the elasticity of water investment in agricultural sector is significant, and positive, and for the rest of the other sectors is non-significant. Also results show that in the short-run and long run, the Granger causality runs from economic growth to water resource investment and vice versa in Iran.

Key words: water investment, economic development, cointegration;