The goal of this paper in to test the effects of different components of government expenditure on industrial sector during (1972-1999). In order to consider the concise effects of fiscal policies, the effect of different components of public expenditure and incomes on industrial vale added and investment has been considered. To do this the government total expenditure has been replaced by expenditures on economics, social, public and defense sectors, and it, has been shown that the kind, combination, and the way it is financed is more important than the total government expenditure.
Although the total government expenditure has no significant effect, but we cannot reject the positive effect of government expenditure on social affairs and negative effect of government expenditure on social affairs. Also government expenditure on economic affairs can significantly improve the value added in industrial sector.
With reference to the result of the model we can conclude that the expenditures - given the tax structure in the pried of study - which is financed through taxes, did not have any significant effect the performances of industrial sector.