Education and Economic Growth in Iran

It has been discussed, during recent years, which of education levels can help stable growth in Iranianeconomy. Some have focused on investing in high education while others, regarding developmentconcept, insist on elementary education. This essay surveys interactive effect between education andeconomic growth in Iran during 1979-2010. In estimating long-term relation between these variables,we have used Johansen co-integration test. Furthermore, for estimating two-, three- and four-variablecausal relation we have used Granger causal test. The results show that different levels of educationhave a positive effect on economic growth, while economic growth has a positive effect only on adultliteracy rate and the number of university students. Granger causal test shows two-sided causal relationbetween adult literacy rate and economic growth. In addition, causal relation in other education levels isone-sided from education to economic growth.

Keywords:

economic growth , education , investment in education , labor force , Johansen co-integrationtest , Granger causality