The Effect of Knowledge-Based Economy on Value Added of Agricultural Sector in Iran

The purpose of this study was to evaluate the effect of knowledge-based economy on value added of Iran’s agricultural sector from 1989 to 2014. To investigate the long-term relationship between the value added of the agricultural sector and ICT index, R&D index, extension and education index, capital and labor variables, Johansen-Juselius Co-integration method and error correction model (ECM) were used. The results of long-term function estimation of the model show a positive and significant impact of ICT index, research and development index, and capital and labor variables on value added of the agricultural sector. The effect of agricultural extension and education index on value added of the agricultural sector was positive but it was not statistically significant. In addition, the results of error correction model show that almost 53% of short-term deviations of the agricultural sector value added from its long-run equilibrium are modified in a period. Hence, the increase in research and development credits in the budget of agricultural sector can be effective in growth of value added of this sector.