Investigating The Effects of Macroeconomic Variables and Support Policy on the Growth of the Agricultural Sector in Iran

The growth of the agricultural sector is considered essential as a substrate for achieving the development goals in developing countries. According the importance of agriculture as well as the risky nature of production, corruption and other purposes, the government have always supported the agricultural sector. This study investigates the effects of macroeconomic variables and policy support on the growth of the agricultural sector in Iran. In this context, factors affecting the value added of the agricultural sector, gross capital formation, exports and imports of agricultural sector were investigated using a three-stage least squares model as a system of simultaneous equations with four equations during the period 1981-2015. The variables of capital-to-labor ratio, producer support, consumer support, exports of agricultural products, and value added lags with coefficients of 0.488, 0.156, 0.008, 0.021 and 0.111, respectively, showed a significantly positive effect on the value added of agriculture. Also, the variable of imports of agricultural products with a coefficient of -0.120 showed a negative and significant effect on the value added of agricultural sector. Factors affecting export, import and gross capital formation of agricultural sector were explained. The results showed that the support policy on the agricultural sector is not of adequate efficiency and it is necessary, for planners and policymakers, to point out the extent and the way of allocating supports more appropriately.