The Contribution of Agriculture to Economic and Productivity Growth of Iranian Economy

The historical experience of many developing countries show that many developing world has not paid enough attention and is not giving serious thought to its agricultural sector. In fact, nearly all the countries that have “undervalued” their agricultural sectors not only failed to grow rapidly, but they all encountered domestic food shortages, balance of payment crisis and some sort of political instability. To develop, industrialization is not enough. Industrialization as a path to development can not succeed without the prior or concurrent emergence of a productive agricultural sector. Using time series data, this paper shows that variation in industrial growth has been significantly associated with variation in agricultural growth over the first period of the development process in Iran. It has further demonstrated that agricultural growth induced productivity increases, and therefore facilitated overall economic growth. Moreover, the role of agriculture was even far important than that of exports in fostering productivity in the post-revolution era. Agricultural growth compensated for the small contribution made by export growth and smoothed some of the adverse effects of inflation.