In collaboration with Iranian Association for Energy Economics(IRAEE) and Scientific Association of Defence Economics of Iran(SADEI)

Document Type : applicative

Author

Depatrment of Economics< PNU

10.30473/jier.2025.73424.1486

Abstract

Nowadays, Productivity is one of the important factors in the growth and development of each industry and organization. Advertising is one of the important market behavior variables that will lead to increase productivity through the impact on profitability and competitiveness in industries. Also Research and development expenditure lead to technological development, cost reduction and productivity increase .In this research, the growth rate of productivity in automobile industry by separating technical efficiency and scale efficiency and emphasis on advertisement and research & development expenditure is investigated, which was done by help of boundary decomposable function and Kumbhakar and Lovell's approach. Estimation has been conducted using fourth edition ISIC (International Standard Industrial Classification) four-digit data for Iranian industrial firms during the time period from 2002 to 2020. The results show that in this period, the average growth rate of production factor productivity in the Iranian automotive industry is -2 percent, which is due to the increase in technical progress with a share of 1.7 percent, changes in technical efficiency with a share of 0.6 percent, and a decrease in scale efficiency of 4.2 percent. There are also diminishing returns to scale in this industry, and the unit cost of production is expected to increase with increasing scale and production capacity. Advertisement has a negative and significant impact and research and development has positive and significant impact on the productivity at the probability level of 5%.

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