Impact of Globalization on Agricultural Production, Exports and Imports in Iran

By Hosseinzadeh, Hedayat | IUP Journal of Applied Economics, January 2010 | Go to article overview

Impact of Globalization on Agricultural Production, Exports and Imports in Iran


Hosseinzadeh, Hedayat, IUP Journal of Applied Economics


Globalization is an inevitable phenomenon. In this study, globalization is defined as a process of growing interdependence between all nations of the world. This linkage is encouraged by market liberalization, and information, communication and transportation technologies. Iran's economy has been shaped by oil export, so the industry and service sectors are mainly dependent on the oil income. But the dependency of the agricultural sector on oil income is very less compared to the other sectors. In 2004, this sector contributed 13.7% to Iran's Gross Domestic Product (GDP) and about 25% and 20% to occupation and Iran's non-oil exports, respectively. This situation shows that agriculture sector, though the smallest sector, plays an effective role in Iran's economy. Its production capacity is large and is capable of exporting to international markets. The results of this paper reveal that globalization has had little impact on Iran's agriculture. But, there is a meaningful difference between the quantity of agricultural production, exports and imports after and before 1995. Moreover, despite some fluctuations in the Intra-Industry Trade (IIT) and the Level of International Trade (LIT) indices, the trend lines of the IIT and LIT indices in general show increasing trend after 1995.

(ProQuest: ... denotes formulae omitted.)

Introduction

Globalization is a process of interaction and integration among the people, companies and governments of different nations. Globalization is centered on the integration of international markets for goods, services, technology, finance and labor. This process affects the environment, culture, political systems, economic development and prosperity, and human well-being in societies around the world. The process of globalization has altered the world economically, politically, socially and culturally, which can be defined primarily as a process of integrating the economic, social and political activity controlled by nation states into a more internationallyintegrated structure.

According to Loyd, globalization on the whole, is the integration of national economy to international economy. This further integration has many effects on the production structure, the role of multinational corporations, Foreign Direct Investment (FDI), consumer's taste, and other aspects of the production and the consumption of the countries involved in trade (Curzen, 2001).

The readiness of the economic structure and the existence of the rules and regulations adaptable to the international economy provide other countries with tools and incentives necessary to further participate in another country's economic activities. However, in order to actively participate in the process of globalization, a particular sector or some sectors of the economy of the domestic country should have the ability to be introduced in the international markets. It is unlikely to realize the benefits of this process without such ability.

Since Iran's agricultural sector has the potential due to its range of products, it is believed that the agricultural sector can be introduced in the international market, provided the necessary arrangements are made. Against this backdrop, attempts have been made in this paper to analyze the affects of globalization on Iran's agriculture.

Measuring Globalization of Economy

It must primarily be mentioned that almost all the previous studies on globalization have emphasized on measuring the impact of globalization is in its early stages. Therefore, there are various theories regarding the methodologies used and different variables introduced as parameters. On the other hand, all the available studies express that measurement of globalization has been applied to industry due to its unique nature.

A series of studies have been carried out on the effects of globalization on public consumption (Cusack, 1997; Swank, 1997; Quinn, 1997; Garrett, 1998; and Rodrik, 1998).

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