Economic Complexity and Food Security of Rural Households in Iran

Subject Areas : Regional Planning

Ali Sardar Shahraki ¹ , Hajar Esnaashari ² , Mohammad Hajipour ^{3 *}

1 - Associate Professor of Agricultural Economics, University of Sistan and Baluchestan, Zahedan, Iran
2 - Assistant Professor of Agricultural Economics, Jiroft University, Jiroft, Iran
3 - Assistant Professor of Geography and Rural Planning, Department of Geography, Faculty of Literature and Humanities, University of Birjand, Birjand, Iran

Received: 2024-09-15 Accepted : 2024-12-27 Published : 2025-07-15

Keywords: Economic Complexity, Food Security, Autoregressive Distributed Lag,

Abstract :

Achieving sufficient, desirable, and nutritionally adequate food has always been a central focus of development efforts. The rapid growth of populations and the consequent demand for food have heightened its importance, leading to a substantial portion of policymaking and scientific research being directed toward addressing food security challenges. Based on experiences, achieving this objective heavily relies on the capabilities of individual countries. Economic complexity is a contemporary concept that reflects a country's ability to produce complex goods and effectively apply knowledge in the production process through the enhancement of productive structures. This research examines the impact of “economic complexity” as a crucial indicator of territorial development on food security. Given that food security is a fundamental component of the quality of life for rural households, which often face significant disparities, the study focuses on the rural communities of Iran during the period from 2001 to 2022. Data analysis was conducted using a distributed lag regression model. The results indicate a long-term and short-term relationship between economic complexity and food security for rural households. Therefore, the initial step toward enhancing food security for rural populations in the country should prioritize economic complexity. Improving and advancing economic complexity will lead to increased agricultural production, thereby playing a significant role in enhancing food security.

 

Extended Abstract 

Introduction

Food security is a critical aspect of development, particularly in rural households where access to sufficient and quality nutrition remains a challenge. The rapid growth of populations and the increasing demand for food have heightened the significance of food security, prompting extensive policy-making and scientific research. This study investigates the impact of economic complexity—a relatively new concept reflecting a country’s ability to produce complex goods and utilize knowledge in production processes—on the food security of rural households in Iran over the period from 2001 to 2022. Given that food security is a fundamental component of rural quality of life, this research aims to elucidate the relationship between economic complexity and food security. According to studies, one of the factors affecting food security is economic complexity. Therefore, this study attempts to answer the following question: Does economic complexity affect the food security of rural households in Iran?

 

Methodology

The study employs a distributed lag regression model to analyze the data collected from various sources, including the Central Bank of Iran and the World Bank. The research utilizes the Autoregressive Distributed Lag (ARDL) approach to assess both short-term and long-term relationships between economic complexity and food security. The model incorporates several variables, including rural GDP, capital stock, population, inflation rate, and trade liberalization, while ensuring the stationarity of the data through unit root tests.

 

Results and Discussion

Before examining the long-term relationship, a stationarity test was conducted for all variables to ensure that none of them are integrated of order two, or I(2). This step helps avoid misleading results, as the F-statistics calculated are not reliable when I(2) variables are present in the model. The F-test is based on the assumption that all variables in the model are either I(0) or I(1). Therefore, conducting a unit root test in the ARDL model is essential to determine whether any variables are integrated of order one or higher (Tashakini, 2005: 29). The results of the unit root test indicated that all variables, except for the rural GDP, were stationary at level. The long-term relationship among the variables was examined using the t-test, which confirmed the existence of a long-term relationship. After estimating the dynamic equation, a model was obtained where the dependent variable was represented with a lag. The coefficient of determination was found to be 0.79, and the F-statistic was 5196, indicating the explanatory power of the model. Additionally, the assumptions of no serial autocorrelation, correct specification, normality, and homoscedasticity were confirmed in this model. After estimating the dynamic equation, a test was conducted to ensure the existence of a long-term relationship. The calculated t-value was 4.99, which, in absolute terms, exceeded the critical t-value from the tables for the 5% significance level (4.78), leading to the rejection of the null hypothesis of no long-term relationship and acceptance of its existence. The determined degree in this study was (1, 0, 0, 0, 1, 2, and 1). After confirming the existence of a long-term relationship among the model variables, the long-term relationship was estimated. The results showed that the trade liberalization coefficient has the most significant impact on food security. The coefficients for economic complexity, GDP, and trade liberalization indicated a positive and significant relationship with food security. Conversely, the inflation rate showed a negative and significant relationship with food security.To analyze how short-term imbalances in food security adjust towards long-term equilibrium, the ECM model was employed. The ECM coefficient indicates the percentage of short-term imbalance in food security that is corrected in each period towards achieving long-term equilibrium. In other words, it reflects how many periods it takes for food security to return to its long-term trend. The error correction term in this model was found to be 0.64, meaning that in each period, 0.65% of the imbalance in food security is corrected, moving closer to its long-term trend.According to the short-term estimation results, the economic complexity variable has a positive and significant effect on food security. A 1% increase in economic complexity raises the food security of rural residents by approximately 1.41 units. Rural GDP, capital stock in rural areas, and trade liberalization also have a direct and significant relationship with food security in the short term. The inflation rate, on the other hand, has a negative and significant relationship with food security in the short term.

 

Conclusion

In this study, the concept of economic complexity was introduced, and the short-term and long-term relationship between economic complexity and food security was examined using time series data for the period 2001-2022 and the ARDL method. The results indicated a positive impact between economic complexity and food security in both the short and long term. An economy with a low level of complexity relies primarily on lower-skilled labor for its production structure and employment; producing simple products with low technology requires minimal skills or knowledge, leading to limited job choices. When a country strives for greater complexity, it shifts its focus toward products that require higher skills, resulting in increased employment and higher income, which provides families with more options for food procurement. Consequently, households can allocate a significant portion of their income to food, ultimately enhancing food security. In a complex economy, individuals benefit from greater freedom of choice, enhanced capabilities, a variety of ideas, and lifestyles, allowing for better adaptability to people's needs. A complex economy can improve living standards and provide citizens with better education, healthcare, and other necessary social services. Therefore, it can be expected that economic complexity contributes to food security. Several studies, including those by Bian (2022), Li and Wang (2021), Gnan and Gnon (2021), and Millie and Titlebom (2020), have also noted that greater complexity increases human capital accumulation, leading to higher production and increased incomes, thereby enhancing households' ability to purchase quality food. When trade liberalization is in place, the prices of agricultural products in the global market become cheaper than domestic prices. The influx of these products into the Iranian market results in lower prices and increased demand for agricultural products, ultimately improving food security. Countries can strengthen high-complexity products in their economies by implementing tax exemptions for companies with advanced technologies. When a country possesses economic complexity, agricultural exports increase, improving the livelihoods and incomes of rural households, which in turn enhances food security.

 

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