Capital Accumulation and Reduction of Income Sources: The Hartwick Model (in Persian)

Saleh Ghavidel (), Mahmoud Mahmoudzadeh () and Rouhangiz Barimani ()
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Saleh Ghavidel: Faculty of Human Science, Firuzkuh Islamic Azad University, Firuzkuh, Iran
Mahmoud Mahmoudzadeh: Faculty of Human Science, Firuzkuh Islamic Azad University, Firuzkuh, Iran.
Rouhangiz Barimani: Firuzkuh Islamic Azad University, Firuzkuh, Iran.

The Journal of Planning and Budgeting (٠صلنامه برنامه ریزی و بودجه), 2018, vol. 23, issue 3, 101-120

Abstract: Natural resource management is of great importance for the countries with abundant resources to ensure capital accumulation and economic growth. The aim of this paper is to estimate capital stock accumulation in Iran on the basis of Hartwick’s Rule. The question is how much capital would be ideal for Iran’s economy? The results show that, based on Hartwick’s rule, capital accumulation is 1.5 to 1.7 times the capital available, which in turn means that a large portion of the annual natural resource revenue is consumed and net saving is negative. When these findings are revalued according to Hartwick’s Rule, adjusted in terms of natural resources rent (particularly oil rent), it indicates that if our economy has allocated 50 to 60 percent of natural resources rent to investment, then the adjusted Hartwick’s rule would be observed. In other words, in the existing institutional arrangement, the optimal adjustment coefficient for allocating resource rent to investment and consumption is between 0.5 and 0.6, demonstrating this fact that Iran’s economy holds the adjusted Hartwick’s Rule at a low level.

Keywords: Hartwick’s Rule; Capital Accumulation; Net Saving; Natural Resource; Oil Rent. (search for similar items in EconPapers)
Date: 2018
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