Investigation of Return to Scale and Technical Change of Iran`s Manufacturing Sub-sectors

Sahabi, Bahram; Ashena, Maliheh; Zabihi, Maryam

doi:10.22075/jem.2017.1513

Investigation of Return to Scale and Technical Change of Iran`s Manufacturing Sub-sectors

Authors

¹ Assistant Professor of Economics, Faculty of Management and Economics, Tarbiat Modares University

² Ph.D. student of Economics, Faculty of Management and Economics,Tarbiat Modares University

³ MA in Economics, Ferdoosi University of Mashhad

10.22075/jem.2017.1513

Abstract

It is the purpose of this paper to evaluate and compare the return to scale and technical change of manufacturing sector subsections of Iran. Therefore, Diewert-Fox model and Törnqvist index and the data of 23 selected manufacturing industrial sectors during 1997-2010 are used. The results show that most of the selected sectors have increasing returns to scale and based on these results, there is potential of efficiency improvements in manufacturing industries. Furthermore, most of these industries experience significant technical change which implies that the growth of manufacturing industries has been driven by both increasing returns to scale and technical progress.

Keywords