Study of Economic Globalization and Growth of Agricultural Sector of Iran
Abstract
After a prolonged inward-looking strategy, Iran has moved towards a more liberalized and open
market structure. So this paper studied the effect of the process of economic globalization on agricultural
sector of Iran. A modified Solow’s growth model was used to estimate the relationship between
globalization factors and growth in agricultural sector. The stationary of variables, Engle-Granger’s
causal relationships and co-integration relationship between variables were determined. An error
correction framework was applied to capture the short-run and the long-run dynamic in the growth model.
Opened economy could be a cause of investing in agricultural sector, and agricultural investment could be
cause of openness. No long-run equilibrium relationship observed between FDI and agricultural value
addition and between FDI and agricultural investment. Openness would increase investment and growth
in agricultural sector. Agricultural growth was observed to be based on labor than the investment in shortrun, whereas in long-run it is mostly based on investment.
Key words: Globalization, Agricultural sector, Growth model, Engle-Granger’s causal
relationships, Error correction model