Is Free Trade Non-Linear Driver Agricultural Growth and Trade? Lessons Learnt from Iran

Fariba Abbasi, Reza Moghaddasi, Ali Kianirad


The primary purpose of this study is to quantify the impacts of trade liberalization on the growth and trade of agricultural products in Iran as one of the leading indicators of globalization on macroeconomic indicators. Also, study the short-term and long-term effects on the liberalization of growth and trade of agricultural products and Study the existence of a non-linear relationship on the liberalization of growth and trade of agricultural products. Iran has been trying to liberalize its trade regime since 1995 in order to increase its growth and trade performance. Despite a long period of liberalization, however, imports still outpace exports widening the trade deficit. Experimental results show that liberalization by reducing the import duty rate in the short-term increases exports by 1.56 percent, but in the long term reduces the number of imports by about 7.65 percent. Estimating the growth showed that the liberalization index in both regimes has a positive and significant effect on agricultural growth. This means that the implementation of trade liberalization policy in the period under study had a positive effect on the growth of the agricultural sector. Therefore, trade liberalization in the short term leads to growth in exports, and in the long term, increased production leads to an increase in exports and a decrease in imports and economic growth.


Keywords: trade liberalization, agricultural trade, agricultural growth, Markov switching, Iran.

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