Generating effective employment opportunities is one of the principal challenges faced by development planners in Iran. If investment projects are undertaken on the basis of sectoral priorities in production and employment, the economic and social problems emanating from unemployment will be reduced, helping the Country’s process of development. In this paper, an attempt is made to identify key sectors in terms of generating output and employment in the economy of Iran as a results of increased investment. The novelty of our approach is to demonstrate how inter-industry relations (input-output table), investment coefficients, and incremental labor-output and capital-output ratios can be integrated to accomplish the above objective. The empirical application of this approach has revealed the pronounced effect of investment on economic and employment growth potential of the service sector and some of manufacturing subdivisions like clothing and leather, other basic metal industries, food and textile manufacturing and wood paper and printing industries.
)