THE EFFECT OF SOCIAL INFRASTRUCTURE ON ECONOMIC GROWTH IN A RESOURCE-RICH ECONOMY: THE CASE OF IRAN

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JAFARI MAHBOUBEH; ESLAMLOUEYAN KARIM; HADIAN EBRAHIM; SAMADI ALI HOSSEIN

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Journal: IRANIAN ENERGY ECONOMICS Year:2014 | Volume:3 | Issue:12 Page(s): 27-60

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Title

THE EFFECT OF SOCIAL INFRASTRUCTURE ON ECONOMIC GROWTH IN A RESOURCE-RICH ECONOMY: THE CASE OF IRAN

Author(s)

JAFARI MAHBOUBEH | ESLAMLOUEYAN KARIM | HADIAN EBRAHIM | SAMADI ALI HOSSEIN | Issue Writer Certificate

Keywords

SOCIAL INFRASTRUCTUREQ2

NON-RENEWABLE NATURAL RESOURCESQ2

OPTIMUM RATE OF ECONOMIC GROWTH AND OPTIMAL CONTROL THEORYQ2

IRANQ3

Abstract

The main goal of this paper is to study the effect of SOCIAL INFRASTRUCTURE on economic growth in a recourse-based economy. To this end, we introduce the quality of SOCIAL INFRASTRUCTURE into an endogenous growth model. The set up allows us to see how the resource abundance can influence the quality of SOCIAL INFRASTRUCTURE and hence economic growth. We use optimal control theory to solve the model. The analytical solution shows that the impact of non-renewable resources on economic growth depends on the models' parameters. More specifically, we find out that if natural resource abundance leads to deterioration of SOCIAL INFRASTRUCTURE, it might offset the positive impact of natural resources on economic growth and even might result in lower economic growth rate. We finally calibrate the model for IRAN as an energy-rich economy. The calibration results indicate that in order to achieve 8 percent average growth rate, the quality of SOCIAL INFRASTRUCTURE should improve by at least 4.3 percent. Moreover, when we ignore the quality of SOCIAL INFRASTRUCTURE, the optimum economic growth rate is found to be 6 percent. This shows that it is important to take into consideration the role of SOCIAL INFRASTRUCTURE in estimating long run economic growth for IRAN. The result of sensitivity analysis indicates that one percent improvement in the index of SOCIAL INFRASTRUCTURE results in 0.42 percent increase in equilibrium growth rate in IRAN. This finding has important policy implications for policymakers and social planners in IRAN.

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APA: Copy

JAFARI, MAHBOUBEH, ESLAMLOUEYAN, KARIM, HADIAN, EBRAHIM, & SAMADI, ALI HOSSEIN. (2014). THE EFFECT OF SOCIAL INFRASTRUCTURE ON ECONOMIC GROWTH IN A RESOURCE-RICH ECONOMY: THE CASE OF IRAN. IRANIAN ENERGY ECONOMICS, 3(12), 27-60. SID. https://sid.ir/paper/244921/en

Vancouver: Copy

JAFARI MAHBOUBEH, ESLAMLOUEYAN KARIM, HADIAN EBRAHIM, SAMADI ALI HOSSEIN. THE EFFECT OF SOCIAL INFRASTRUCTURE ON ECONOMIC GROWTH IN A RESOURCE-RICH ECONOMY: THE CASE OF IRAN. IRANIAN ENERGY ECONOMICS[Internet]. 2014;3(12):27-60. Available from: https://sid.ir/paper/244921/en

IEEE: Copy

MAHBOUBEH JAFARI, KARIM ESLAMLOUEYAN, EBRAHIM HADIAN, and ALI HOSSEIN SAMADI, “THE EFFECT OF SOCIAL INFRASTRUCTURE ON ECONOMIC GROWTH IN A RESOURCE-RICH ECONOMY: THE CASE OF IRAN,” IRANIAN ENERGY ECONOMICS, vol. 3, no. 12, pp. 27–60, 2014, [Online]. Available: https://sid.ir/paper/244921/en

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