Agricultural Economics

Agricultural Economics

The Impact of Economic Complexity on Agricultural Value Added in Iran

Document Type : Research Paper

Authors
1 Department of Agricultural Economics, Urmia University
2 Associated Professor, Department of Agricultural Economics, Faculty of Agriculture, Urmia University
Abstract
Iran's economy and foreign exchange earnings have been under tremendous strain in recent years due to economic sanctions imposed on the country. Diversifying the economy and lowering reliance on oil have become essential in order to lessen these effects. An important sector of the Iranian economy, agriculture, can be played in this endeavor. The present research attempts to examine the influence of the Economic Complexity Index (ECI) on the value added of agriculture in Iran from 1996 to 2022. Other factors taken into account include the amount of land that is cultivated, changes in temperature, the amount of nitrate consumed, agricultural credits, and the rate of inflation. The Food and Agriculture Organization and the World Bank provided the data, which was analyzed using the Autoregressive Distributed Lag (ARDL) model. The findings show that agricultural credits and the ECI have a long-term, positive impact on agricultural value added, while changes in temperature and the area under cultivation have a long-term, negative impact. The effects are more complicated in the short term, with the ECI having a negative influence on value added while cultivated area and nitrate consumption demonstrate a positive and significant impact. It is suggested to diversify the country's exports in order to increase agricultural value added over the long run, especially by expanding exports of processed goods and agricultural products.
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