Investigating the Effect of Good Governance Quality on Agricultural Sector Growth

Document Type : Research Paper

Authors

• Hosein Hajimirza ¹
• Reza Shakeri Bostanabad ²

¹ Master of Agricultural Economics, University of Tehran.

² Ph.D. Student in Agricultural Economics, University of Tehran.

Abstract

According to the viewpoint of institutionalist economists, by moving in the direction of improving the quality of governance, inclusive economic and political institutions are formed, leading to sustainable growth of various sectors of the economy and ultimately development. One of these key sectors is agriculture and food markets. Accordingly, the aim of this study is to investigate the effect of good governance quality on agricultural sector growth in selected developing countries during the period 1996-2016 by using the Bayesian Vector Autoregressive (BVAR). The study area includes the countries of the Economic Cooperation Organization (ECO), the Shanghai Cooperation Organization, the South American Common Market (Mercosur), the Economic Community of West African States (ECOWAS). Studies have shown that the growth of the agricultural sector is generally affected by good governance indicators in the long run and with varying intensity. In Iran, government effectiveness and quality of regulation are the most influential indicators of governance, and political stability and lack of violence, corruption control, rule of law, and critique and accountability are at a later stage.

Keywords

• Institutional Economics
• Good Governance Index
• agricultural growth
• Developing Countries

20.1001.1.20086407.1399.12.48.7.3

---

References

- Abdollahi, Z. Hoshmand, M. Daneshnia, M. & Eskandaripour, Z. (2012). The Impacts of Supply and Demand Shocks On Agriculture Growth. Agricultural Economics & Development, 25(4). 452-458. (In Persian).

- Acemoglu, D. & Robinson, J.A. (2012). Why nations fail: the origins of power, prosperity, and poverty. Finance and Development-English Edition, 49(1), p.53.

- Acemoglu, D. Johnson, S. & Robinson, J. (2005). The rise of Europe: Atlantic trade, institutional change, and economic growth. American economic review, 95(3),546-579.

- Azizi, A. Mehrabadi, H. & Zare, M. (2015). Analysis of Effect of Trade Liberalization on the Growth of the Agricultural Sub Sectors. Journal of Applied Economics Studies in Iran, 4(13), 85-105. (In Persian).

- Baradarn Shoraka, H. & Malek Sadati, S. (2007). The Impact of Good Governance (Based on World Bank Indicators) on Economic Growth in Selected Countries (1996-2005). Scientific Research Journal of Rahbord. (In Persian).

- Doan, T. Litterman, R. & Sims, C. (1984). Forecasting and conditional projection using realistic prior distributions. Econometric reviews, 3(1), 1-100.

- Domar, E. D. (1946). Capital expansion, rate of growth, and employment. Econometrica, Journal of the Econometric Society, 137-147.

- Gillis, M. Perkins, D.H. Roemer, M. & Snodgrass, D.R. (1996). Economics of development WW Norton & Company. New York.

- Harrod, R. F. (1939). An essay in dynamic theory. The economic journal, 49(193), 14-33.

- Khalili, S. & Ghahremanzadeh, M. (2017). Study the Theory of Export-Led Growth in the Agriculture Sector in Iran: Evidence from Structural VAR Model (SVAR) and Directed Acyclic Graphs (DAG). Agricultural Economics, 10(4), 81-99. (In Persian).

- Kheradmand, M. & Tayebi, S.K. (2007). Bayesian analysis of vector autoregression. master thesis. Faculty of Science, University of Isfahan.

- Khosroabad, M. Zayanderoody, M. & Shakibaee, A. (2016). The Effect of Good Governance Indicators on Income Inequality Selected Countries Southwest Asia and the Countries of the Organization for Economic Cooperation and Development.  Social Welfare Quarterly.16 (61):159-185. (In Persian).

- Lucas, Jr. R. E. (1988). On the mechanics of economic development. Journal of monetary economics, 22(1), 3-42.

- Mahdavi Adeli, M. Hosseinzadeh Bahraini, M. & Javadi, A. (2008). The effect of good governance on attracting foreign direct investment in middle-income countries. Journal of Knowledge and Development. 15 (24). 102-85. (In Persian).

- Mankiw G. & Romer, D. (1991). New Keynesian economics, Cambridge, MIT Press.

- Mohammadi, H. Mohammadi, M. & Tirgari-Seraji, M. (2018). Investigating Factors Affecting on Per Capita GDP Growth in Different Groups of Countries with Emphasis on Governance Indicators. Journal of Economic Modeling Research. 8 (30):109-145. (In Persian).

- Moradi, M. & Salmanpour, A. (2018). The effect of good governance on income distribution in a selected group of Organization of Islamic Countries (OIC). Sociology of Social Institutions, 4(10), 33-59. (In Persian).

- Nadiri, M. & Mohammadi, T. (2011). Estimating an Institutional Structure in Economic Growth Using GMM Dynamic Panel Data Method. Economic Modeling, 5(15), 1-24. (In Persian).

- Padash-Zive, H. & Khodapanah, B. (2015). An Estimation of the Impact of Good Governance Indicators on Knowledge-based Economy in Selected Countries. The Journal of Planning and Budgeting. 20 (3) :165-187. (In Persian).

- Piñeiro, M. (2007). Agricultural technology transfer to developing countries and the public sector. Sci Dev net. Policy briefs (January). http: www. scidev. net. en.policy-briefs.agricultural-technology-transfer-todeveloping-cou. html.

- Pishbahar, E. Dashti, G. & Ferdosi, R. (2014). The Effect of Macroeconomic Variables on Value-Added Agriculture: Approach of Vector Autoregresive Bayesian Model (BVAR). Agricultural Economics & Development, 28(3), 282-291. (In Persian).

- Pishbahar, E. Ghahramanzade, M. & Jafari, S. (2014). The Effect of Monetary Policy on Food Price Index: An Application of Factor Augmented Vector Autoregressive (FAVAR) Approach. Agricultural Economics & Development, 27(4), 319-327. (In Persian).

- Pradhan, R.P. & Sanyal, G.S. (2011). Good governance and human development: evidence from Indian States. Journal of Social and Development Science, 1(1), pp.1-8.

- Qadiri Asl, B. (2008). The course of economic thought. University of Tehran. (In Persian).

- Rigobon, R., & Rodrik, D. (2005). Rule of law, democracy, openness, and income: Estimating the interrelationships1. Economics of transition, 13(3), 533-564.

- Rodrik, D. (2005). Growth strategies. Handbook of Economic Growth 1 (1), 967-1014

- Romer, P. M. (1986). Increasing returns and long-run growth. Journal of political economy, 94(5), 1002-1037.

- Ruttan, V. W. (2002). Productivity growth in world agriculture: sources and constraints. Journal of Economic Perspectives, 16(4), 161-184.

- Sadeghi shahdani, M. Saheb honar, H. Azim zadeh arani, M. & Hoseini dolatabadi, S. (2013). Analysis of the Effects of Monetary Shocks on Macro Variables in Iran a Bayesian VAR Approach. Journal of Applied Economics Studies in Iran, 1(4), 91-124. (In Persian).

- Sahebhonar, H. Cheshomi, A. & Falahi, M. (2013). The Effects of Monetary Shocks on Iran Economic Sectors. Quarterly Journal of Economic Growth and Development Research, 3(11), 56-41. (In Persian).

- Sameti, M. Ranjbar, H. & Mohseni, F. (2012). The Effect of Good Governance Indicators on Human Development Index: the Case of ASEAN Countries. Quarterly Journal of Economic Growth and Development Research, 1(4), 223-183. (In Persian).

- Shahabadi, A. & Ganji, M. (2015). Impact of Good Governance on Economic Freedom in MENA Countries. Journal of Economy and Regional Development, 22(9), 246-288. (In Persian).

- Sharif Azadeh, M. Komijani, A. Mohammadi, T. & Bagheri, A. (2014). Investigating the Impact of Neoclassical and Institutional Variables (Good Governance Indicators) on the Employment Rate of Developed Countries Member of the Organization for Economic Co-operation and Development (OECD). Journal of Applied Economics. 4. 15-1. (In Persian).

- Shetty, P. (2015). From food security to food and nutrition security: role of agriculture and farming systems for nutrition. Journal of Sustainable Food and Nutrition Security, 109(3), 456-461

- Sims, C. A. (1980). Macroeconomics and reality. Econometrica: journal of the Econometric Society, 1-48.

- Sims, C. Stock, J. & Watson, M. (1990). Inference in linear time series models with some unit roots. Econometrical, 58(1): 113-144.

- Solow, R. M. (1956). A contribution to the theory of economic growth. The quarterly journal of economics, 70(1), 65-94.

- Svatoš, M. Smutka, L. & Selby, R. (2015). Capital Stock Value Development in Relation to the New EU Countries’ Agricultural Sector Development. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 62(6), 1437-1450.

- Swan, T. W. (1956). Economic growth and capital accumulation. Economic record, 32(2), 334-361.

- Zayanderoody, M. khosroabadi, M. Shakibaeei, A. (2017). The Effects of Good Governance Indicators on Income Distribution Using Panel Data (Case Study: Selected South-Western Asian Countries). The Economic Research. 17 (3) :25-52. (In Persian).