In this paper productivity is calculated for oil and gas sectors by Solow residual. Productivity is one of the important issues which have an important role in optimal production. The oil and gas industry is one of the most fundamental industries in Iran and has a high share in export and national income. The Neo-classical model is an extension to the Harrod-Domar model including a new term, productivity growth. Solow residual is the base on a production function with two factors, labour and capital, which economic growth rate is calculated from sum of labour growth, capital growth and a residual as the Solow residual or total factor productivity growth which is an often used measure of technological progress. The estimation of production function for oil and gas sector shows that capital elastisity is 0.56 and labour elastisity is 0.37. The results show that productivity have the highest share in value added of oil and gas sectors while capital and labour inputs have a little share in the growth of this section. Of course this result sounds natural because oil and gas industrials have a inherent value of reserve.
JEL Classification: D24, J24, O40, O41,O42, O43, O44, O47, E23, L11