Some Approaches to Encourage Investment in Iran's Agricultural Sector

Agriculture sector is certainly one of the most important parts of economy and due to added-value factor can be regarded as the premier productive sector in the country. Despite having a strategic significance in materialization of economic goals of the country, and accounting for a noticeable share of the GDP, agriculture sector grabs a minor proportion of the country’s investments. Taking some seminal theories of investment into account, one may argue that on the one hand investment in one sector is influenced by the incomes, and on the other hand, it is affected by investment costs. The current paper aims to investigate to which economic macro-variables (incomes and costs) is investment in Iran’s agricultural sector susceptible; whether the demand for investment in agricultural sector is mainly influenced by the incomes of the sector or the varying investment costs are affecting the tendency of the investors? Assessing the non-linear demand model of investment suggests that investment demand in agricultural sector is mainly affected by the price variable. The price variable utilized in this study is the indicator of the price of agricultural products. In other words, adopting appropriate price policies in this sector will urge further investment. Also, the analysis of the above model indicates that investment cost is the second factor influencing demand for investment after price variable. Furthermore, the susceptibility of investment to the sector incomes outweighs its susceptibility to costs of investment.