The main purpose of this article is to evaluate the effect of education on Iran’s economic growth during 1338-89 within the framework of endogenous growth theory, focusing on three key issues: exploring the scope and main aspects of education and growth with their theoretical and technical requirements, a critical evaluation of Iranian empirical research dominated by crucial problems and challenges, and suggesting an appropriate growth model. The effects of some theoretical and methodological challenges dominating the empirics of the relationship between education and economic growth are examined, using data from the central bank and Statistical Center of Iran sources. We found that (1) the scope of education and growth is very wide including many issues and aspects nonetheless the empirics of education and growth involving a very narrow line and aspect, (2) the estimates of the determinants of economic growth are sensitive to the type of growth model, variable measurements and econometric problems mostly ignored in the previous research, (3) among the 11 growth models estimated, only one model provides the best and most justifiable estimates of the determinants - Model 6 of Table 5 based on the results of the model physical capital, education, population growth, depreciation rate and technological changes significantly affect Iran’s steady-state economic growth, which are consistent with the main stream of empirical findings and theoretical underpinnings. In particular it is found that the effect of education on growth is twice as the effect of physical capital (i.e., 0.83 in comparison with 0.52), which clearly shows the importance of educational investment

Keywords: Iran’s Economic Growth, Endogenous Growth Models, Steady State, Growth Determinants, Educational Investment

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