UNIVERSITI PUTRA MALAYSIA

A SYSTEM DYNAMICS INVESTIGATION OF EMPLOYMENT IN THE

IRANIAN AGRICULTURAL PRODUCTION

MOHAMMAD HASHEM MOOSAVI HAGHIGHI

FP 2007 11

A SYSTEM DYNAMICS INVESTIGATION OF EMPLOYMENT IN THE IRANIAN AGRICULTURAL PRODUCTION

By

MOHAMMAD HASHEM MOOSAVI HAGHIGHI

Thesis Submitted to the School of Graduate Studies, Universiti Putra Malaysia, in Fulfilment of the Requirement for the Degree of Doctor

Philosophy

August 2007

ii

Dedications

To my wife, father, mother and sons,

Mohammad Reza and Parsa who have

supported me throughout in this study.

iii

iv

Abstract of thesis presented to the Senate of Universiti Putra Malaysia in fulfilment of the requirement for the degree of Doctor Philosophy

A SYSTEM DYNAMICS INVESTIGATION OF EMPLOYMENT IN THE IRANIAN AGRICULTURAL PRODUCTION

By

MOHAMMAD HASHEM MOOSAVI HAGHIGHI

August 2007

Chairman: Professor Mad Nasir Shamsudin, PhD

Faculty: Agriculture

Agriculture is an important economic sector and a strategic component for

rural development in Iran. The sector contributed about 15% of the country‟s

value added in 2005, and created 23% of the total employment in 2004.

However, the sector is basseted with a labour surplus situation as indicated

by the high labour/ land ratio. This situation, together with inappropriate

combination of labour with other factors of production, has caused a low

level of labour productivity, and hence, low growth rate in the agricultural

sector. Thus, the general objective of this study is to determine the optimal

employment and production policies in the agricultural sector of Iran.

Whereas, the specific objectives are to estimate the econometric models of

the Iranian agricultural sector to determine the production and other

relationship in the System Dynamics (SD) model; to develop a SD model

and identify the relationship among the socio-economic variables in the

agricultural sector of Iran for simulating the future trend of employment and

production; and to simulate the SD model pertaining to different scenarios.

v

This study employed the econometric methods and SD simulation model by

incorporating the dynamic changes of the socio-economic variables.

Econometric methods provide representations of the system in equations.

Production, export-import, demand for labour and agricultural products, as

well as the wage functions were estimated using data collected over 35

years, and substituted in the economic component of the SD model.

A dynamic demand for the labour equation incorporating a Disequilibrium

Costs (DC) and Adjustment Costs (AC) was estimated from 1966/67 to

2000/01. The results indicated significant relationships between

employment, production, wages and cross-price elasticity on labour demand.

This suggests that the adjustment co-efficient was too slow (0.044) since AC

was higher than DC, and the existent of substitution relation between the

capital and labour, and the war which had negative effects on the agricultural

labour demand.

The exchange rate variable had the expected sign in the export and import

functions. The per capita income in the „Organization for Economic Co-

operation and Development‟ (OECD) countries, had a positive sign in the

export equation. The agricultural price index and agricultural production had

respectively negative and positive effect on the agricultural export. On the

other hand, outcomes of the war and Islamic Revolution on the agricultural

export were negative. In the import equation, the national income per capita

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had a positive effect, while the real exchange rate had a negative effect on

the agricultural import.

Analysis on the results of the production functions confirms the priori

expectation that the Iranian agricultural sector is facing low marginal product.

The capital and land were also found to be scarce resources, and have

imposed a gradual binding constraint on the production. The Return to

Scale (RTS) before the materialization of the Islamic Revolution was positive

(1.87), but turned to negative after that event (-1.74). The Pure Technical

Change (PTC) has increased over the time (0.30 to 0.43), while the Non-

Neutral Technical Change (NNTC) has declined (-0.35 to -0.39). Obviously,

the results of production functions reveal that the production technology of

the Iranian agriculture does not have a well-behaved quality. The overall

results suggest that policy makers should reduce the labour force in the

agricultural sector, and improve the capital-intensive methods in order to

simultaneously increase the output and productivity of the sector.

In developing the SD model of the Iranian agriculture, the specifications of

the estimated equations are substituted in the SD model to specify some

relationships between a number of important variables. However, other

mathematical formulations are also used to build the SD model. The validity

of the model was done based on several tests such as error checking,

dimensional consistency, behaviour reproduction, sensitivity analysis,

extreme condition, boundary adequacy, structure assessment, parameter

assessment, and integration error tests. The results of all tests indicated that

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the ability of the SD model to simulate agricultural sector was acceptable.

The brief results of SD model are as follows:

The rural population showed a collapse behaviour type during the 1998-2021

period. The rural population is a source of agricultural supply. The results of

the SD model simulation indicate that a turnpike for the labour surplus

problem will happen in 2008. After that period, the agricultural employment

will decline gradually per year. Hence, it can be stated that the labour

surplus problem automatically declines in the mid-term period. On the other

hand, the rate of migration from the rural to the urban areas will increase and

consequently move the unemployment problem from the rural to the urban

areas.

The results of the simulated agricultural production indicate that the average

production growth rate in 2007-2021 is about 2% per year. According to the

development plan, the real growth rate in the whole economy should

increase 8.6% annually. Obviously, this shows that the growth rate in the

agricultural sector is not much over the future time with the country‟s goals

and production in the period (2007-2021) need more consideration. In

supporting the increment in production, the increase in inputs (especially

land and capital) is needed. When these increases in the process of

production are successful, they have been accompanied with the

improvement in the overall technical change.

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Based on the SD simulation model for the period of 2006-2021; the results

indicated that rural population, export, and employment would decline (35%,

21%, and 30%, respectively) while the rural emigration, labour and

agricultural demands, production, capital, and import would also increase

(116%, 21%, 43%, 32%, 102%, and 193%, respectively).

The major policy implications from the study suggest that if the government

could increase arable land by providing improvement in the irrigation system,

reduce labour in order to decrease labour/land ratio, improvement in the

overall technological methods (PTC and NNTC), these efforts would

considerably improve the agricultural productivity. When the government

changes the market factors such as the agricultural price index, real

exchange rate, worker wage, they will have great effects on the employment,

but only a small effect on the production. The overall results of study

demonstrate the way to combine the different methodologies, i.e., the SD

and econometrics, to be further effective.

Keywords: System Dynamics Simulation, Socio-Economic Model, Agricultural Labour,

Production Functions, Dynamic Demand for Labour, Export-Import Functions, Agricultural

Demand

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Abstrak tesis yang dikemukakan kepada Senat Universiti Putra Malaysia sebagai memenuhi keperluan untuk ijazah Doktor Falsafah

KAJIAN MENGGUNAKAN SISTEM DINAMIK KE ATAS PELUANG PEKERJAAN DALAM PENGELUARAN PERTANIAN IRAN

Oleh

MOHAMMAD HASHEM MOOSAVI HAGHIGHI

Ogos 2007

Pengerusi : Professor Dr. Mad Nasir Shamsudin, PhD

Fakulti : Pertanian

Pertanian merupakan sektor ekonomi yang penting dan juga komponen

strategik untuk pembangunan luar bandar di Iran. Sektor pertanian

menyumbangkan 15% nilai tambah negara pada 2005, dan mewujudkan

23% peluang pekerjaan pada 2004. Walaubagaimanapun, sektor tersebut

dibebani dengan situasi lebihan tenaga kerja seperti yang ditunjukkan oleh

nisbah tenaga kerja/tanah yang tinggi. Situasi ini, disertakan dengan

kombinasi tenaga kerja dan faktor-faktor pengeluaran lain yang tidak

bersesuaian telah menyebabkan tahap produktiviti tenaga kerja yang rendah

dan seterusnya mengakibatkan kadar pertumbuhan yang rendah dalam

sektor pertanian. Oleh itu, objektif am kajian ini adalah untuk menentukan

polisi-polisi pekerjaan optima dan pengeluaran dalam sektor pertanian Iran.

Objektif spesifik adalah untuk menganggarkan model-model ekonometrik

sektor pertanian Iran untuk menentukan pengeluaran dan hubungan lain di

dalam model Sistem Dinamik (SD); untuk membangunkan model SD dan

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mengenalpasti hubungan antara angkubah-angkubah sosio-ekonomi di

dalam sektor pertanian Iran untuk mensimulasikan aliran peluang pekerjaan

dan pengeluaran masa hadapan; dan untuk mensimulasikan model SD

dengan senario-senario yang berbeza.

Kajian ini menggunakan kaedah-kaedah ekonometrik dan model simulasi

SD dengan menggabungkan perubahan-perubahan dinamik angkubah-

angkubah sosio-ekonomi. Kaedah-kaedah ekonometrik mewakili sistem di

dalam bentuk persamaan - persamaan. Pengeluaran, eksport-import,

permintaan untuk tenaga kerja dan produk-produk pertanian, dan juga

fungsi-fungsi upah yang dianggarkan dengan menggunakan data yang

dikumpul selama 35 tahun, dan menggantikan komponen ekonomi dalam

model SD.

Permintaan dinamik untuk persamaan tenaga kerja menggabungkan kos

tidak seimbang (DC) dan kos penyelarasan (AC) yang dianggarkan dari

tahun 1996/97 sehingga 2000/01. Keputusan kajian menunjukkan hubungan

yang signifikan di antara peluang pekerjaan, pengeluaran, upah keanjalan

harga silang dalam permintaan tenaga kerja. Ini menunjukkan bahawa

penyelarasan ko-efisien adalah terlalu rendah (0.044) memandangkan AC

lebih tinggi dari DC, wujudnya hubungan penggantian di antara modal dan

tenaga kerja dan kesan negatif perang terhadap permintaan tenaga kerja

untuk pertanian.

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Angkubah pertukaran sebenar mempunyai tanda yang dijangkakan dalam

fungsi eksport dan import. Pendapatan per kapita dalam negara-negara

Kesatuan Kerjasama Ekonomi dan Pembangunan (OECD) mempunyai

tanda yang positif dalam persamaan eksport. Indeks harga pertanian dan

pengeluaran pertanian masing-masing mempunyai kesan yang positif dan

negatif ke atas eksport pertanian. Namun begitu, kesan dari perang dan

revolusi Islam mempunyai kesan yang negatif ke atas eksport pertanian.

Dalam persamaan import, pendapatan per kapita negara mempunyai kesan

yang positif, manakala kadar pertukaran sebenar mempunyai kesan yang

negatif ke atas import pertanian.

Analisis ke atas keputusan-keputusan fungsi-fungsi pengeluaran

mengesahkan tanggapan awal bahawa sektor pertanian Iran menghadapi

produk marginal yang rendah. Modal dan tanah merupakan sumber-sumber

tidak mencukupi dan menyebabkan kekangan ke atas. Pulangan pada skala

(RTC) sebelum berlakunya Revolusi Islam adalah positif (1.87) tetapi

menjadi negatif selepas revolusi tersebut (-1.74). Perubahan teknikal tulen

(PTC) telah meningkat (0.30 kepada 0.43) manakala perubahan teknikal

tidak neutral (NNTC) telah menurun (-0.35 kepada -0.39). Secara amnya,

keputusan-keputusan dari fungsi-fungsi pengeluaran menunjukkan bahawa

teknologi pengeluaran pertanian Iran tidak mempunyai kualiti yang baik.

Keputusan keseluruhan mencadangkan bahawa pembentuk dasar patut

mengurangkan tenaga kerja dalam sektor pertanian, dan memperbaiki

kaedah-kaedah intensif modal untuk meningkatkan hasil pengeluaran dan

produktiviti sektor secara serentak.

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Dalam membangunkan model SD pertanian Iran, spesifikasi-spesifikasi

dalam persamaan-persamaan yang telah dianggarkan digantikan ke dalam

model SD untuk menentukan hubungan-hubungan di antara beberapa

angkubah yang penting. Walaubagaimanapun, formulasi-formulasi matenatik

juga turut digunakan untuk membangunkan model SD. Kesahan model

tersebut telah dilakukan berdasarkan beberapa ujian seperti pemeriksaan

kesilapan, konsistensi dimensi, tingkahlaku reproduksi, analisis sensitiviti,

keadaan ekstrem, kebolehcukupan sempadan, penilaian struktur, penilaian

parameter dan ujian ralat integrasi. Keputusan-keputusan ujian

menunjukkan bahawa kemampuan model SD untuk mensimulasikan sektor

pertanian diterima. Keputusan-keputusan model SD adalah seperti berikut:

Populasi luar bandar telah menunjukkan perubahan gelagat dari tahun 1998-

2021. Populasi luar bandar merupakan sumber penawaran pertanian.

Keputusan dari simulasi model SD menunjukkan bahawa masalah lebihan

penawaran tenaga kerja akan berlaku pada tahun 2008. Kemudian, peluang

pekerjaan dalam bidang pertanian akan menurun secara perlahan-lahan

setiap tahun. Oleh yang demikian, masalah lebihan tenaga kerja akan

menurun secara automatik di pertengahan jangkamasa tersebut. Namun

begitu, kadar migrasi dari kawasan luar bandar ke kawasan bandar akan

meningkat dan sekaligus menyebabkan masalah pengangguran berubah

dari kawasan luar bandar ke bandar.

Keputusan dari simulasi pengeluaran pertanian menunjukkan bahawa purata

kadar pertumbuhan pengeluaran pada 2007-2021 ialah sebanyak 2% per

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tahun. Berdasarkan pada pelan pembangunan, kadar pertumbuhan sebenar

dalam keseluruhan ekonomi sepatutnya meningkat 8.6% setiap tahun.

Secara kasarnya, ini menunjukkan bahawa kadar pertumbuhan dalam sektor

pertanian adalah tidak sejajar dengan matlamat negara dan pengeluaran

pada jangkamasa tersebut (2007-2021) memerlukan lebih pertimbangan.

Dalam usaha menyokong peningkatan dalam pengeluaran, peningkatan

dalam input (terutamanya tanah dan modal) diperlukan. Apabila peningkatan

dalam proses pengeluaran ini berjaya maka ia akan disertai oleh kemajuan

dalam keseluruhan perubahan teknikal.

Berdasarkan model simulasi SD dari tahun 2006-2021, hasil kajian

menunjukkan bahawa populasi luar bandar, eksport dan peluang pekerjaan

akan menurun (35%, 21% dan 30% masing-masing) manakala emigrasi luar

bandar, permintaan tenaga kerja dan pertanian, pengeluaran, modal dan

import akan meningkat (116%, 21%, 43%, 32%, 102%, and 193% masing-

masing).

Implikasi polisi yang utama dari kajian ini mencadangkan jika kerajaan dapat

menambahkan tanah yang sesuai untuk dibajak dengan membekalkan

pembaikan dalam sistem pengairan, mengurangkan tenaga kerja untuk

mengurangkan nisbah tenaga kerja/tanah, pembaikan dalam kaedah

teknologi secara keseluruhan (PTC dan NNTC), usaha-usaha ini dianggap

akan dapat meningkatkan produktiviti pertanian. Apabila kerajaan mengubah

faktor-faktor pasaran seperti indeks harga pertanian, kadar tukaran wang

asing, upah pekerja di mana ianya akan mempunyai kesan yang besar

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terhadap pekerjaan tetapi kesan yang kecil ke atas pengeluaran. Keputusan

dari kajian ini secara amnya menunjukkan cara untuk menggabungkan

kaedah-kaedah yang berbeza seperti SD dan ekonometrik, untuk menjadi

lebih berkesan.

Kata kunci: Simulasi sistem dinamik, model sosio-ekonomi, tenaga kerja pertanian , fungsi-

fungsi pengeluaran, permintaan dinamik tenaga kerja, fungsi-fungsi eksport-import,

permintaan pertanian

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ACKNOWLEDGEMENTS

All praises to the Almighty Allah, the Most Gracious and Merciful, who is

omnipresent, for giving me the strength and determination to complete this

study. No words can express adequately my sense of indebtedness yet I feel

I shall be failing in my obligation if I do not put on record my gratitude to the

following persons:

I am deeply indebted to Prof. Dr. Mad Nasir Shamsudin, Department of

Agribusiness and Information System, Universiti Putra Malaysia, as the

chairman of supervisory committee who, provided valuable guidance in all

aspects of the research process. Special thanks are also due to my

supervisory committee members, Associate Prof. Dr. Zainal Abidin

Mohamed, and Dr. Norsida Man for sharing their time and ideas, comments

and advice on developing and reporting this research and for serving as

members of my committee.

I wish to express my special thanks to Dr. Mansoor Zibaei and Prof. Dr

Seeyd Ahang Kowsar, Dr Amini, Mr. Amir Khalesi, Mr Amir Bahaman

Hassan Agahei, Mr. Akbarpoor, Mr. Masoud Fanni, Mr. Ali Fanni, Mr.

Dastbala, Dr. Badjian, Dr. Rahimi Soorahe, Dr. Bostaki, Mr. Arabkhedri and

Mr. Sharam Karimi for their support I will never forget. It is also my pleasure

to thank all the lecturers and staff at the Department of Agribusiness and

Information System, Faculty of Agriculture, UPM for their guidance and

support throughout my study.

xvi

I would like to thank Dr. Mehrdad Mohammadnia, Mr. Nejabat and all

members of Agricultural and Natural Resources Research Centre of Fars

province for their support. My thanks are also to my colleagues Ms. Golnaz

Rezai, Majid Sanai from Iran and Dr. Abudulla Faraha from Somalia. Special

thanks to my Iranian friends and their family (in Malaysia) whom I will never

forget.

I want to express thanks to my dear wife for her love, and my Father,

Mother, Sisters, and Sons for moral support and their long patience. Finally I

want to express my special deep thanks and appreciation to Mr. Kerammat

Mohammadnia, who helped me in one way or the other during my absence

from Iran.

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I certify that an Examination Committee met on 9th August 2007 to conduct the final examination of Mohammad Hashem Moosavi Haghighi on his of Doctor Philosophy thesis entitled “A System Dynamics Investigation of Employment in the Iranian Agricultural Production” in accordance with Universiti Pertanian Malaysia (Higher Degree) Act 1980 and Universiti Pertanian Malaysia (Higher Degree) Regulation 1981. The Committee recommends that the candidate be awarded the relevant degree. Members of the Examination Committee are as follows: Nitty Hirawaty Kamarulzaman, PhD Lecturer Faculty of Agriculture Universiti Putra Malaysia (Chairman) Mohd Mansor Ismail, PhD Associate Professor Faculty of Agriculture Universiti Putra Malaysia (Internal Examiner) Amin Mahir Abdullah, PhD Lecturer Faculty of Agriculture Universiti Putra Malaysia (Internal Examiner) Mohd Fauzi Mohd Jani, PhD Professor Faculty of Economic and Management Universiti Kebangsaan Malaysia (External Examiner)

_________________________

HASANAH MOHD. GHAZALI Professor/Deputy Dean

School of Graduate Studies Universiti Putra Malaysia

Date:

xviii

This thesis submitted to the Senate of Universiti Putra Malaysia and has been accepted as fulfilment of the requirement for the degree of Doctor of Philosophy. The members of the Supervisory Committee are as follows: Mad Nasir Shamsudin, PhD Professor Faculty of Agriculture Universiti Putra Malaysia (Chairman) Zainal Abidin Mohamed, PhD Associate Professor Faculty of Agriculture Universiti Putra Malaysia (Member) Norsida Man, PhD Lecturer Faculty of Agriculture Universiti Putra Malaysia (Member)

_______________________

AINI IDERIS, PhD Professor/Dean School of Graduate Studies Universiti Putra Malaysia Date:

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DECLARATION

I hereby declare that this thesis is based on my original work except for quotations and citations, which have been duly acknowledged. I also declare that it has not been previously or concurrently submitted for any other degree at UPM or other institutions.

_______________________________________

MOHAMMAD HASHEM MOOSAVI HAGHIGHI

Date:

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TABLE OF CONTENTS

Page DEDICATION ii ABSTRACT iii

ABSTRAK viii ACKNOWLEDGEMENTS xiv APPROVAL xvi

DECLARATION xviii TABLE OF CONTENTS xix LIST OF TABLES xxii

LIST OF FIGURES xxvi LIST OF ABBREVIATIONS xxxiii CHAPTER 1 INTRODUCTION 1.1 Iranian Agricultural Sector 1.1 1.2 Issues and Challenges 1.6 1.2.1 Agricultural Production 1.6 1.2.2 Agricultural Employment 1.7 1.2.3 Population and Migration 1.9 1.2.4 Employment and Production Clash 1.11 1.2.5 Rural Unemployment 1.14 1.2.6 Labour Surplus Problem 1.16 1.2.7 Land Resources 1.19 1.3 Issues and Challenges in Perspective 1.20 1.4 Problem Statement 1.23 1.5 Objective of the Study 1.25 1.6 Significance of the Study 1.26

2 BACKGROUND OF THE IRANIAN AGRICULTURAL SECTOR

2.1 Agricultural Production 2.4 2.2 Agricultural Employment 2.8 2.3 Resources 2.10 2.3.1 Water Resources 2.10 2.3.2 Agricultural Soil and Land Resources 2.12 2.3.3 Forest 2.13 2.3.4 Rangelands 2.14 2.3.5 Livestock and Poultry 2.15 2.3.6 Fishery and Aquatics 2.16 2.4 Conclusion 2.17 3 LITERATURE REVIEW 3.1 Econometric Models 3.1 3.1.1 Production Functions 3.2 3.1.2 Demand for Labour Functions 3.7

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3.1.3 Export and Import Functions 3.11 3.2 System Dynamics Models Studies Outside Iran 3.16 3.2.1 Industrial and Economic Dynamic Models 3.18 3.2.2 Limits to Growth Models 3.18 3.2.3 Management: Firm and Market Models 3.19 3.2.4 Decision-Making Models 3.19 3.2.5 Socio-Economic Models 3.21 3.2.6 Economic and Agricultural Economic Models 3.26 3.3 System Dynamics Models Studies in Iran 3.31 4 METHODOLOGY 4.1 Production Functions 4.1 4.1.1 Production Function Selection 4.10 4.2 Dynamic Demand for Labour 4.17 4.3 Export and Import Functions 4.22 4.4 Demand for Agricultural Products 4.25 4.5 Wage Function 4.27 4.6 Unit Root Test 4.28 4.7 System Dynamics 4.31 4.7.1 System 4.32 4.7.2 Simulation 4.33 4.7.3 System Dynamics Model 4.37 4.7.4 Usefulness of System Dynamics Simulation

Models 4.43

4.7.5 Step in a System Dynamics Simulation Model 4.46 4.7.6 Socio-Economic Model for the Agricultural

Sector of Iran 4.72

4.7.7 Data Sources 4.78 5 ANALYSIS OF THE RESULTS 5.1 Unit Root Test (Stationary Test) 5.1 5.2 Estimated Econometrics Functions 5.6 5.2.1 The Production 5.9 5.2.2 The Dynamic Demand for the Agricultural

Labour 5.31

5.2.3 The Export and Import Functions 5.32 5.2.4 The Demand for the Agricultural Products 5.34 5.2.5 The Agricultural Wage Function 5.35 5.3 System Dynamics Model Validity 5.37 5.3.1 Error Checking Tests 5.38 5.3.2 Dimension Test 5.39 5.3.3 Behaviour Reproduction Tests 5.40 5.3.4 Sensitivity Analysis 5.62 5.3.5 Extreme Condition Test 5.82 5.4 System Dynamics Policy Optimization 5.97 5.4.1 Policy-Makers Optimization 5.100 5.4.2 Payoff Optimization 5.121

xxi

6 CONCLUSIONS 6.1 Summary of Findings 6.1 6.1.1 Estimated Econometric Functions 6.3 6.1.2 System Dynamics Model 6.8 6.2 Policy Implications 6.18 6.3 Limitation of the Study and Recommendations

for Future Research 6.26

REFERENCES APPENDICES BIODATA OF THE AUTHOR

R.1 A.1 B.1

xxii

LIST OF TABLES Table Page

1.1 Total Value Added and the Value Added of the Four Main Sectors of Iran (Billion Rial, 1990=100)

1.4

1.2

Total Population Separated into Rural and Urban Areas

(Million People)

1.10

1.3 Employment and Value Added in the Agricultural Sector of Iran 1.11

1.4 The Rates of Unemployment in the Rural and Urban Areas 1.15

2.1

Production, Imports and Consumption of Some Major Commodities, 1985 and 1995 (Million Tones)

2.5

2.2 Place of Iran Among the First 10 Countries, Based on the Variations of Garden Products

2.6

2.3 The Rank of Some Iranian Farming and Garden Products in the World

2.7

2.4 A Comparison Between the GDP Growth Rate and the Annual Labour Productivity of Selected Countries

2.9

2.5 Rainfall in the Major Basins in Iran 2.11

2.6 Status of Underground Water Resources in Iran 2.12

2.7 Areas of Different Classes in Soil-Recognized Lands in Iran 2.13

2.8 Area and Share of Iran Forests 2.14

2.9 The Status of Rangelands in Iran 2.15

4.1 Mathematical Formulations for the Eight Functional Forms, Marginal Products (MPi) and Elasticities (Ei)

4.9

4.2 Initial Component List of Variables 4.56

5.1 Unit Root Test for Production Functions Variables 5.2

5.2 Unit Root Test for Export, Import, Dynamic Demand for Labour, Demand for Agricultural Products and Wage Function Variables

5.3

5.3 Unit Root Test for the Residuals of Econometrics Functions 5.6

xxiii

5.4 Results of the Estimation of Linear, Polynomial, CD, CES and Transcendental Production Functions for the Agricultural Sector of Iran

5.10

5.5 Results of the Estimation of Translog, Generalized Quadratic and Generalized Leontief Production Functions

5.11

5.6 Elasticities Calculated from the Non-Flexible (Ordinary) Production Functions

5.13

5.7 Elasticities Calculated from the Flexible Production Functions 5.14

5.8 Marginal Products Calculated from the Non-flexible (Ordinary) Production Functions

5.17

5.9 Marginal Products Calculated from the Flexible Production Functions

5.18

5.10 Number of Significant Coefficients and Results of the Jarque-Bera Normality Test

5.20

5.11 Ramsey‟s Test 5.21

5.12 Likelihood Ratio Test 5.24

5.13 Marginal Product of the Translog Production Function with Technological Change over Different Time Periods

5.26

5.14 Elasticities and Return to Scale over the Different Time Periods (Calculated from the TWTC Function)

5.28

5.15 Decomposition Rate of the Technical Change in the PTC and NNTC in the Agricultural Sector of Iran

5.30

5.16 Results of the Estimation Dynamic Demand Function for the Agricultural Labour

5.31

5.17 Results of the Estimation Agricultural Export Function 5.33

5.18 Results of the Estimation Agricultural Import Function 5.34

5.19 Results of the Estimation Demand for Agricultural Products 5.35

5.20 Results of the Estimation Agricultural Wage Function 5.36

5.21 Statistical Validation Tests for the Rural Population (Thousand People)

5.42