The influence of agricultural investment incentives on agricultural gross domestic product in Turkey: an autoregressive distributed lag boundary testing approach


Sönmez H.

14th International Conference on Agriculture, Animal Science & Rural Development, İzmir, Turkey, 22 - 24 March 2024, pp.1109-1126

  • Publication Type: Conference Paper / Full Text
  • City: İzmir
  • Country: Turkey
  • Page Numbers: pp.1109-1126
  • Dokuz Eylül University Affiliated: Yes

Abstract

The agricultural sector is one of the strategically important sectors for both developing and developed countries. In particular, it has become necessary to produce high value-added products in the agricultural sector, which encounters increasing competition due to globalization. Thus, many countries are promoting the agricultural sector through various practices. The aim of this study is to examine the impact of agricultural investment incentives on agricultural gross domestic product in Turkey. Annual data for the period 2001-2023 have been used in the study in line with this objective. Firstly, the stationarity of the variables in the econometric model has been tested using Augmented Dickey Fuller and Phillips Perron unit root tests. The results of both unit root tests results indicate that the variables are stationary when their first differences are taken in the model. Then, the presence of short and long-term relationships between the variables has been analyzed using the Autoregressive Distributed Lag Bound Test approach after the unit root tests. ARDL model’s bounds test approach findings denote that there is a cointegration relationship between agricultural investment incentives and agricultural gross domestic product in the long term. Moreover,  positive and statistically significant relationship has been identified between the variables in the model. According to the results obtained from the long-term coefficient estimation, a 1% increase in agricultural investment incentives increases agricultural gross domestic product by 0.14%. On the other hand, the error correction coefficient, which has been found to be negative(-0.11) and statistically significant, is consistent with theoretical expectations. This result indicates that short-term imbalances will converge to the long-term equilibrium level. The findings suggest that investment incentives should be increased for sub-sectors that are strategically important in the agricultural sector. It is believed that emphasis should be placed on agricultural investment incentives that take into account the dynamics of each region on a regional basis, thereby increasing productivity. Furthermore, it is considered that policies encouraging agricultural investments in technology to enhance value-added in agricultural production should be supported.