Understanding the Causes of the Decline in the Iraqi Agricultural Sector’s Contribution to the GDP

Abstract

The agricultural sector is one of the most important economic sectors in Iraq. It is ranked second after the crude oil sector in terms of its contribution to the gross domestic product (GDP). However, its contribution to the GDP declined from 26.93% in 1991 to 10.86% in 2004, 7.23% in 2010, and 4.77% in 2020. This decline can be attributed to many determinants of agricultural production that had a significant impact; therefore, this study aimed to investigate the determinants of agricultural production in Iraq during the period 2004:1- 2020:4 using the Autoregressive Distributed Lag Model (ARDL). The study concluded that there is a short and long-run equilibrium relationship between the GDP and the cultivated area, corruption, inflation, agricultural investment, agricultural production requirements, the availability of water, and employment in agricultural, on the other hand. The results indicated the significant impact of these variables on agricultural GDP in the long run. The main variables contributing to the agricultural GDP are water availability, corruption, and employment in agricultural. The estimates of the short-run parameters would correspond in terms of signs and significance with the results of the long-run estimates, even if the parameters’ values varied in different proportions. It indicates that the Iraqi agricultural sector suffers from a lack of optimal use of agricultural resources. Therefore, decision-makers in Iraq must adopt an effective agricultural policy by setting plans for the optimal use of water and paying attention to the human element to be qualified to carry out employment in agricultural and attract investment in the agricultural sector to develop it. It is also necessary to put in place financial and economic policies that reduce the adverse effects of inflationary pressures in the short and long terms, combat rampant corruption in the country, and preserve agricultural lands and reclamation of unsuitable lands.