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Investigating the Mutual Relation between Entrepreneurship in Manufacturing Sector, Economic Growth and Employment in Iran Using SUR and SVAR Methods

Author

Listed:
  • Motallebi, Masoumeh

    (Ph.D in Economics, Lorestan University)

  • Alaizadeh, Mohammad

    (Associate Professor of Economics, Lorestan University)

  • Nazari Farsani, Mohsen

    (Ph.D Candidate in Economics, Allameh Tabataba’i University)

Abstract

The present study investigates the relation between entrepreneurship in Manufacturing sector, economic growth and employment rate in the Iranian economy, using the vector Auto-regressive model, using the Seemingly Unrelated Regression method and short-run Structural Vector Auto-Regressive model. According to the dependence of the Iranian economy on oil exports, sanctions and fluctuations in oil price in recent years have reduced economic growth in Iran. Entrepreneurship in the industry according to the young population of Iran, can lead to increase capacity in manufacturing sector, which in turn can have a positive impact on increasing non-oil exports and reduce the dependence of the Iranian economy on oil revenue. After estimating the model using annual data from 1959 to 2016, the results show that entrepreneurship in industrial sector has a positive effect on economic growth with six periods of lag and employment rate with five periods of lag in Iranian economy. Therefore, entrepreneurship can have a positive effect on employment and economic growth if new businesses are created for sequential periods and not closed for at least six years. Employment rate has a positive effect on entrepreneurship in the industrial sector and economic growth with two periods of lag. The results for the short-run SVAR pattern reflect the positive effect of economic growth on employment. Therefore, increasing economic growth can have a positive effect on employment rate in the current term.

Suggested Citation

  • Motallebi, Masoumeh & Alaizadeh, Mohammad & Nazari Farsani, Mohsen, 2019. "Investigating the Mutual Relation between Entrepreneurship in Manufacturing Sector, Economic Growth and Employment in Iran Using SUR and SVAR Methods," Quarterly Journal of Applied Theories of Economics, Faculty of Economics, Management and Business, University of Tabriz, vol. 6(3), pages 215-240, October.
    • Handle: RePEc:ris:qjatoe:0164
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    More about this item

    Keywords

    Entrepreneurship; New company formation; Economic growth; Employment; VAR model;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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