Combination of Econometric Methods and System Dynamics Approach to Improve the Iranian Agricultural Policies

摘要

Agriculture is an important economic sector and a strategic component for the rural development in Iran. However, the sector has been beset by a labour surplus situation as indicated by the high labour/land ratio. This situation, together with inappropriate combination of labour with other factors of production, has caused a low growth rate in the agricultural production. The main objective of this study was to determine the optimal employment and production policies in the Iranian agricultural sector. Econometric methods provide representations of the system in equations. Production, export-import, demand for labour and agricultural products, as well as the wage functions were estimated using the data collected during 35 years, and substituted in the economic component of the System Dynamics (SD) model to simulate the outcomes. The results indicate that a downward turn for the labour surplus problem will happen in 2008. After wards, the agricultural employment will gradually decline. Consequently, the cityward migration will increase, and the unemployment problem shifts from the rural to the urban areas. The average annual production growth rate in the 2007-2021 period is estimated at 1.8%. Furthermore, higher production is commensurate needed with substantial investment and adoption of appropriate technology. This study further demonstrates that combination of the SD approach and econometrics methods is highly effective in arriving at logical answer.