The Effect of Trade Instability on Growth of Agriculture Sub-Sectors in Iran

In this study، export and import earnings instability in agricultural sub-sectors of Iran is calculated by using of Love index during 1996-2010، and its impact on the growth of sub-sectors is investigated. Results of the Solow growth model estimation by using panel data and fixed effects approach show that agricultural sub-sectors growth decreases for each one percent increase in the exports and imports earnings instability by0. 024 and 0. 038 percent respectively. Exports and imports instability increases the risk of foreign trade and consequently the risk of activity in these markets. In these conditions، traders and farmers limited their activities، and or transferred their capital to other industries less uncertainty. Sub-sectors growth model is used partially. The results indicate a direct correlation between instability of export with growth of farming، horticulture and animal husbandry subsectors. Also، the effect on growth of fisheries and forestry sub-sectors estimated to be negative. Instability of import growth is directly related to the forestry sub-sector and has a negative effect on growth of other subsections. Therefore، adopting policies to avoid instability and reducing its consequences can have a positive impact on growth، employment and investment in the agriculture sub-sectors.