The Study of Government's Supportive Policie's Impact on Productivity in Agricultural Sector in Iran (Panel Data Approach)

Increase in the productivity of production factors in agriculture sector is of great importance. This study examines the impact of government's supportive policies on the total factor productivity in Iran's agriculture sector over the period 1981-2010. For this purpose, the Torn-Quist index (known as total factor productivity index) is used to determine the total factor productivity and PSE (known as the Producer Support Estimate index) to calculate the amounts of support in subsectors of agriculture. Hence, the Panel Data Approach was applied to estimate the productivity model in agriculture sector. Estimation of total factor productivity in agriculture sector suggests that supportive policies have meaningful and positive impact on total factor productivity of agriculture sector. Based on the results of the survey, supporting policies as an important and effective factor for productivity of agriculture sector must be considered more seriously by politicians. These supports should be granted to exemplar farmers with high-performance to encourage them. Besides, other manufacturers would utilize more convenient methods of production to improve performance, and therefore total factor productivity will increase.