Effect of Total Factors Produtivity on Bilateral Export Capacity in the Agricultural Sector of Iran and European Union

The agricultural sector is one of the most important axes of economic development in many countries of the world. Therefore, it seems necessary to pay attention to the power and potential export capacities of this sector and the factors affecting the increase of these capacities in international trade in light of the Total productivity of production factors. The present study was conducted to investigate the effect of the total productivity of production factors on the bilateral export capacity of Iran's agricultural sector and the European Union member countries. In this study the total productivity of agricultural production factors is calculated through the Tornqvist index and from the gravity model to study the effect of variable of agricultural TFP of Iran and the European Union, and other influencing variables during the period of 1980-2015 have been used. The statistical data are related to Iran and 24 EU members state and the panel data method using the fixed effects model has been used to estimate the model. The results of the fixed effect model for the export capacity of Iran's agricultural sector showed that the total productivity of production factors in Iran and the total productivity of production factors in importing countries (EU) have a positive and significant effect on export capacity of Iran's agricultural sector. The results also indicate a positive and significant effect of total productivity of production factors of agricultural sector in the member countries of this union and the insignificant effect of the total factor productivity of Iran's agricultural sector on the export capacity of the European Union. To achieve more reliable results, we suggest implementing executive strategies to achieve higher productivity growth by managers such as more investment, better and more comprehensive training for manufacturers, the use of modern technology, and specialization of workers in priority to be placed in future studies.