Determinants of Growth, Labour Productivity and Poverty in Rural Areas of Iran

The purpose of this study has been to study eterminants of growth, labor productivity and poverty in rural areas of Iran. The contribution of agriculture and rural development to pro-poor growth.stem from many sources: It Plays an important, and often a lead, role in the early stages of pro-poor growth. Beyond its direct contribution to growth, a number of features specific to the sector enhance its contribution to pro-poor growth, including the concentration of the poor in the sector, the large size of its growth linkages to other sectors, and the positive externalities from assuring food security and reducing food prices. While no doubt the global economy has the potential to improve the efficiency of resource allocation and speed technological change, which are the short-run and long-run sources of economic growth,nevertheless it is Pro-poor economic growth which is the basic vehicle for reducing poverty.Increased agricultural productivity plays a central role in promoting pro-poor growth, especially in the early stages of development and when productivity growth results in lower food prices. Productivity plays a significant role in increasing conomic growth and competitiveness of a country in international market also. It not only saves energy and resources and help allocation of resources efficiently, but also helps to to increase the standard of living. Through higher level of income and output, it, thereby, reduces the level of poverty. Therefore every country rich and the poor try to increase its productivity. However, determinants of productivity differ among countries. Finding the main determinants of productivity is very important. Using simultaneous equations during the period1360-1386 and taking into account various variables such as wage rate, agriculture terms of trade with non-agricultural sectors, infrastructure such as electricity and institutions such as property rights, rule of law, transparency in rules and regulations and, security for which we have taken the number of registered court petitions and litigation documents regarding willful murder, manslaughter, assault, battery and threat for security, the documents related to the lessor and the lessee, robbery, drawing bad cheques for property rights, and aggression and for rules and regulations, driving without license, driving regulations offences destruction, forcible possession and detainer nuisance and other dispute documents for transparency in law and order and bribery and forgery and embezzlement for corruption as explanatory variables together with growth and productivity of agricultural sector. The result show that while increase in the variables such as wage rate, productivity, government investment on infrastructure and terms of trade, play a positive rule in poverty education, however, with the exception of wage rate and labor productivity the coefficients were not statistically significant. Growth and unemployment has had positive relationship with poverty level, though the coefficient of growth were not statistically significant. This, however, indicate that reliance on economic growth for poverty reduction, alone, is not sufficient. On the other hand variables such as education and economic growth has had positive and statistically significant impact on labor productivity in agricultural sector, while infrastructure and institutions has had negative impact. As for the economic growth, the variables such as openness to world trade, education and government investment for infrastructure has had positive impact, while institutions appeared to be the main hindrance factor of economic growth and poverty reductions, indicating that markets work if they have rules, enforcement mechanisms, and organizations promoting market transactions. This finding thus emphasize on both institutions that support growth and those that directly affect access of people left out of many market activities. It considers those institutions that provide opportunities for people and that empower them. With the exception of government expenditure for infrastructure development, the other coefficients were statistically significant