Investigating the Factors Affecting the Value Added of Iran's Agricultural Sector

The agricultural sector in Iran, like other developing countries, is important in several ways. This sector accounts for a significant share of the country's economy and accounts for a much larger share of labor employment. Hence, the added value and welfare created per capita of labor in this sector is less than other sectors. In this regard, it is necessary to upgrade its production capacity and create added value. In this study, an attempt is made to measure the effect of various factors on the value added of the agricultural sector during the period 1967-2017 using the production function method and the ARDL model. The results showed that in the long run, for one percent increase in physical capital, natural resources, human capital and knowledge and technology, the value added of the agricultural sector will increase by 0.44, 0.20, 0.75 and 0.12 percent, respectively. Due to the declining trend of increase in physical capital, the necessary policies should be adopted to enhance investment. In general, the agricultural sector needs sufficient capital, based on appropriate knowledge and technology, and skilled and capable workers.