This research offers proper models to calculate the rate of return   and spillover of research & development in 7 selected industry in Iran  including: chemical industry, petroleum   products,  basic metals, computers and electronics, pharmaceuticals, automotive, cement, through developing of  Cobb Douglas function based on data derived from 1999 to 2006.
The results indicate that in these industries, R & D intensity as an explanatory variable has a high correlation with the growth of Total Factor Productivity (TFP).
Total estimated rate of return on R & D and its spillovers are about 13-23% respectively. These rates are much lower than developed countries.
Findings also indicate that R & D spillover's effect on productivity growth in these industries are much lower than in developed economies. Therefore, to accelerate the growth of the economy in addition to increase the   R & D expenditures,  the  overextension of effects of the R & D spillover in domestic industries are so important and should seriously follow in development programs of IR.IRAN.