Investment Needed in Agriculture to Achieve the Economic Growth Target in the Seventh Development Plan in Iran

Document Type : Research Article

Author

• Koohsar Khaledi

Agricultural Planning, Economic and Rural Development Research Institute (APERDRI), Tehran, Iran

https://doi.org/10.22067/jead.2024.86191.1244

Abstract

Introduction
Theoretically in relation to economic growth and methods of calculating value added, the four factors of labor, capital, labor productivity, and capital productivity are considered, and the amount of value added will be the final product of the state and direct performance of these four factors. Since investment is an available option and has faster execution capability than the change in the quality of agricultural labor and the driver of changes in the productivity of other production factors, it is inevitable to focus on it by statesmen and macro and sector planners to realize the target economic growth in the agricultural sector. With this description, the macroeconomic planners of the agricultural sector have not determined the required amounts of investment, labor and productivity of labor and capital in the agricultural sector to realize the economic growth target in the 7^th development plan. The role of investment as the driver of this (realization of the economic growth goal of the 7^th development plan years) is not hidden from anyone, and determining the amount of investment required in this process will be very important for the policymaker. The main question of this study is, what is the amount of annual investment needed to realize the economic growth of Iran's agricultural goal in the 7^th development plan? For this reason, the present study aims to estimate the amount of investment needed to realize the economic growth of the country's agricultural target (assumed) in the seventh development plan (2024-2028).
 
Materials and Methods
The current research is analytical-descriptive and with a computational approach, it deals with the estimation of the investment needed to realize the economic growth of the agricultural sector of Iran in the 7^th Development Plan (2024-28). The time period considered in this study is 2011-2028. The estimation of the required investment of the agricultural sector in order to realize the economic growth of this sector in the 7^th development plan has been done parametrically (algebraically) and by using the capital elasticity in the studies, the increasing ratio of capital to production (ICOR) and the average productivity of the net capital balance. Considering that the target economic growth for economic sectors including the agricultural sector in the 7^th Development Plan has not been specified, therefore, in the form of different scenarios, three different economic growths (3.5 percent, 5.5 percent, and 8 percent) as The target (assumed) economic growth for the agricultural sector is considered in the years of the 7^th development plan.
 
Results and Discussion
Climate changes and destruction of basic production resources are the most important challenges facing Iran's agriculture. In the 7^th Development plan bill, economic growth of 8% is defined for the entire country's economy. In order to avoid over-reliance on basic resources in the agricultural production process and increase its resilience, a sustainable leap in targeted agricultural investment will be the most important choice of the government in the mid-term (7^th development plan) and long-term. The aim of this study is to estimate the annual investment required in the agricultural sector in the 7^th development plan, and in this regard, three approaches have been used to estimate the amount of annual investment required in the agricultural sector of Iran to achieve the target (assumed) economic growth. Examining the average of different approaches to estimate the annual investment for the target (assumed) value added growth of agriculture showed that according to the assumptions of the study and based on the prices of the base year 2016 (2016=100) to realize the growth of the value added of 3.5% necessary with a growth rate of 4.5%, an average of 183 thousand billion rials will be invested in Iran's agricultural sector annually. These figures will be 6.1% and about 234 thousand billion rials respectively to achieve 5.5% value added growth and 8.2% respectively and about 304 thousand billion rials to achieve 8% value added growth. There is no doubt that in addition to making the necessary investment, the realization of each of the target (assumed) growth of value added in the agricultural sector in the years of the 7^th plan, on the one hand, depends on the existence of suitable and stable climatic conditions (as the main prerequisite for the production of agricultural products) and on the other hand, it is not imposing new shocks or crises on the agricultural economy of our country.
 
Conclusion
The destruction of basic resources and climate changes in Iran's agricultural field are taking place in such a way that it has made it difficult to produce agricultural products in a large area of Iran in the field (the need to develop greenhouse crops) and on the other hand, the development of capital in the process of agricultural production (as a supplement or substitute for other production inputs) in order to increase productivity and preserve the limited and deteriorating production resources has made agriculture more necessary than in the past. Past experiences show that changing the financing approach for investing in Iran's agricultural sector is inevitable. Therefore, it is necessary that in the seventh development plan while separating investment facilities and agricultural working capital facilities during the 7th development plan, improving the environment for agricultural investment and the mechanism for transferring savings to this sector, optimal allocating domestic financial resources (National Development Fund, banking system, support fund for The development of investment, micro-agricultural funds, etc.) and foreign financial resources (foreign direct investment) should be planned in such a way that the investment made in the agricultural sector is coordinated and proportionate with the economic growth of the program.

Keywords

• Agricultural sector
• Economic growth
• Investment
• Iran

Main Subjects

• Agricultural and Village Development

©2024 The author(s). This is an open access article distributed under Creative Commons Attribution 4.0 International License (CC BY 4.0), which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source.

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