Study the Theory of Export-Led Growth in the Agriculture Sector in Iran: Evidence from Structural VAR Model (SVAR) and Directed Acyclic Graphs (DAG)

Despite the relationship between exports and economic growth, there is not a clear causality relationship between these variables. This relationship is different depending on the country's economic structure. In this context, this study seeks to the causal link between the export of agriculture sector and agricultural growth in Iran using new causal approach. Directed Acyclic Graphs (DAG) method is applied to identify the structural shocks in a structural VAR model. DAG method allows the examination of both contemporaneous and dynamic causal structure of the exports-productivity nexus. The results showed that the causal relationship between the exports of agriculture and agricultural growth is unilateral and direction is from the agricultural growth to the agricultural export. This confirmed the hypothesis of growth–led export in the agriculture sector. Also investment in the agriculture sector plays an important role in explaining the agricultural growth and exports; therefore creating incentives for investment in agriculture is suggested by policy makers.