Abstract:
This paper examines the effects of agricultural land productivity improvement on the
economy of Iran assuming that the domestic and international trade liberalizations will
open up the opportunities to expand market access. A 25-sector computable general equilibrium
model was developed to simulate the effects of this policy. The simulation results
indicate that enhancing agricultural land productivity while implementing trade policy
reform results in an expansion of agricultural sector which, in turn, leads to the expansion
of food manufacturing and service sectors and mitigating the problem of unemployment.
Furthermore, improving land productivity results in a decrease in the price of food products
and an increase in real GDP. Consequently, food security enhances and Iranian welfare
improves. As a result, this is an appropriate domestic policy for Iran. This policy results
in an expansion of agricultural sector which in turn leads to expansion of food manufacturing
and service sectors, mitigates the unemployment problem, improves the Iranian
welfare as the real GDP increases, and improves the food security in Iran, as the price of
food products decreases.
