Asymmetry in the Effects of Imports on Agricultural Growth (Application of NARDL Approach)

Agriculture is recognized as the driving force of economic growth, especially in developing economies. Attention to agriculture is extremely important, especially during economic sanctions owing to its critical roles such as income for rural people, food security, job creation, and foreign exchange earnings. On the other hand, foreign trade is vital to technology transfer to the country. The present study investigates the linear (nonlinear) relationship between agricultural import shocks and agricultural growth in Iran using annual data for the period 1978-2020 by application of the nonlinear autoregressive distributed lag model (NARDL). The results confirmed asymmetry in the impact of imports on growth. In other words, the superiority of the nonlinear model was in explaining the relationships between variables. To be specific, a positive and negative shock to agricultural imports affected sector growth by 0.18 and -0.05 percent, respectively in the long run. However, the latter was found statistically insignificant. Moreover, we found evidence of the asymmetry in the effect of other variables (except labor) on growth.