Investigating the Effect of Green Subsidies on Employment, Investment and Value added of Iran's Agricultural Sector Using the CGE Model

Document Type : Research Article-en

Authors

• M. Bakeshloo
• Gh. Yavari
• A. Mahmoudi
• A. Nikoukar
• F. Alijani

Department of Agricultural Economics, Payame Noor University, Tehran, Iran

https://doi.org/10.22067/jead.2021.71051.1052

Abstract

One of the most important economic policies in most countries is to support producers or consumers through subsidies. The category of green subsidies has been proposed in the direction of agricultural development, which is in line with the law on targeted subsidies, but in a real way. Green subsidies belong to farmers and are used to boost business and industry in the agricultural sector. The purpose of this study is to investigate the effects of Iran's accession to the World Trade Organization by applying a simulated green subsidy policy on the variables of employment, investment, and value added in the agricultural sector, which is designed in the form of 20%, 50% and 100% scenarios. The model was calibrated using the social accounting matrix of 2011 and the baseline scenario (0% of green subsidies). GAMS software was used to analyze the data in this research. The results show an increase in employment in the agricultural sector during the effects of Iran's accession to the World Trade Organization and by applying the green subsidy simulation policy, in 20, 50 and 100% scenarios. Also, the implementation of green subsidy policy has led to an increase in investment in the agricultural sector.This is  due to the increased production in this sector and as a result, increase in the use of intermediate inputs. The results obtained from the mentioned shocks show that value added in the agricultural sector has an upward trend, which is due to the increase in the use of factors of production in this sector.

Keywords

• Agriculture section
• CGE model
• Green Subsidy
• World Trade Organization

20.1001.1.20084722.1400.35.4.4.0

Main Subjects

• Agricultural Economics

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