The study of factors affecting productivity in the agriculture sector of Iran

Abstract

Production growth through the promotion of productivity is one of the main goals of countries. According to the country's fifth development plan; it is predicted that 33.3% of annual economic growth will be provided by improving productivity. Therefore, identifying factors promoting productivity is very important. This paper examined the causal relationship among productivity in the agriculture sector and some economic variables in Iran by applying the econometric techniques. The study explains the concepts and indicators of productivity and describes its role in promoting economic growth. In this study, we developed a new approach to define productivity and determine factors affecting it in the agriculture sector of Iran. We divided the economy to two sectors; 1) agricultural sector and 2) non-agricultural sector, covering the entire of Iran’s economy. We employed agricultural economics and welfare economics’ concepts and methods such as; production possibilities frontier, mathematical planning and social welfare function and also global efficiency to specify factors affecting productivity in agricultural activities. On the other hand, we considered empirical studies about concepts and indices of productivity and finally stipulated some suitable models and estimated all models applying a time series of variables covering 1959 to 2007 period; and chose two of the best models with well econometric characteristics. The results indicated that productivity (value added and its growth) in the agricultural sector of Iran, significantly depends on relative prices of agricultural goods, quantity and quality of resources, and technical progress on production methods, especially management styles.Finally, coefficients of the model were estimated, the main hypotheses were examined and solutions for improving productivity are presented. Key words: Agricultural sector, econometric, general equilibrium, productivity, relative prices of products.