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INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS
JUNE 2011
VOL 3, NO 2
The final form of its econometrics model is:
(15)
Variables of this model are:
: Differential of logarithm of gross domestic product of the province i in year t that shows economic
growth of provinces during the time.
: Differential of logarithm of active population of the province i in year t that shows growth of the active
population during the time.
: Differential of logarithm of physical capital inventory of the province i in year t that shows growth of
physical capital inventory during the time.
: Differential of logarithm of human capital inventory of the province i in year t that shows growth of
human capital inventory during the time. is the disturbing element.
Before dealing with the method of model's estimation it is necessary to give explanations about the manner of
extraction of the model variables. The main reason for selecting of the studying period in this survey (2001-2007) is
availability of information related to gross domestic product of provinces in this period. Twenty eight (28) provinces
are studied in this survey and data related to three provinces of Khorasan Razavi, Khorasan Jonoubi and Khorasan
Shomali from the year 2005 onwards has been added to each other and they are considered as one province
(Khorasan) in the analysis. No statistics and information about physical capital inventory of provinces has already
been published by any organization, because of this we have used a representative variable in the present survey.
Provincial investment has been obtained from the sum of banks' paid accommodations to the private sector and
performance of reconstruction credits of the province (in Iran a low percentage of paid accommodations to the
private sector 5 is allocated to performing of investment activities but because of being close to the variable of
physical capital inventory, it is supposed that the paid accommodations are spent for investment). Then proportion
of gross domestic product of the province to the gross domestic product of the whole country in 2001 is multiplied
by pure physical capital inventory 6 and the obtained amount is considered as the primary inventory of physical
capital. Afterwards, investment price of the province is added to the primary inventory of physical capital to obtain
physical capital inventory for next years. At last, educational and health care expenditures that are indexes for
human capital are extracted from the output value of the education and health sector which reveal spent expenditures
on education and health by government and the private sector. These statistics for the years 2001-2007 have been
published by Statistics Center.
6.1. Estimation of the model in the state of existence of educational expenditures
First, we estimate the model in the form of stable impacts that F-Limer statistic has been equal to 278.5 (with the
possibility of 0.76). As a result, the null hypothesis (pooling) could not be rejected. After estimating of the model
5 -paid accommodations of banks to the private sector are considered as representative of the private sector’s
investment. Source:Central Bank
6 - Source: Iran’s Central Bank
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