The impact of trade liberalization on the growth and development of Iran's agricultural sector

Subject Areas : Increase yield

valiollah Shahbazkhani ¹ , Asma Hosain zadeh yarbakht ²

1 - Assistant Professor, Department of Economic, Kerman Branch, Islamic Azad University, Kerman, Iran
2 - Phd student, Department of Economics, , Kerman Branch, Islamic Azad University, Kerman, Iran

Received: 2025-01-06 Accepted : 2025-01-18 Published : 2025-03-20

Keywords: Trade liberalization, World Trade Organization, Iran, VECM, VAR,

Abstract :

Globalization, as a process of rapid economic integration among countries, encompasses trade liberalization, the flow of investment, and technological changes. Trade liberalization, influenced by shifts in relative prices, will have both positive and negative effects on exporters and importers. The vulnerability of agricultural products in the context of globalization underscores the competitive pressures of declining prices and the exchange rates of raw materials and food products compared to industrial goods, highlighting the significance and sensitivity of support for this sector. The present study aims to examine trade liberalization's impact on the agricultural sector's growth using the Solow growth model. The Solow model is better suited to reflect the actual economic conditions of developing countries, and as such, it is expected to provide more accurate results compared to other models. In this research, the Vector Autoregressive (VAR) approach, alongside long-run Johansen analysis and the Vector Error Correction Model (VECM), has been employed to analyze the relationship between trade liberalization and agricultural sector output. The results indicate that, in the initial phase, trade liberalization has a negligible effect on agricultural growth, and the long- term analysis shows that the impact of trade liberalization on agricultural output in Iran is negative and relatively smaller.

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