An Empirical Analysis of Competitiveness of Agricultural Products in Kurdistan Province

اقتصاد و توسعه کشاورزی

Article 1, Volume 34, Issue 1 - Serial Number 47, March 2020, Pages 1-13   

Document Type: Research Article

DOI: 10.22067/jead2.v33i4.73577

Authors

H. Rahiminia^{* 1}; B. Akbari Moghadam²

¹Payame Noor University of Marivan

²Islamic Azad University of Ghazvin

Abstract

Introduction: The limitations regarding production factors as well as the increasing global markets requirements have increased the importance of products competitiveness. Despite its potentials for export including easy access to Iraq's market as well the availability of important resources of agricultural products, Kurdistan province in Iran has failed to make progress in terms of production and exporting agricultural products. Iran's Kurdistan Province has the important water and labor sources of Agricultural products. Kurdistan share of Iran's Agricultural products export is nearly 1.5 percent. Kurdistan province must recognize its comparative and competitive advantage to increase its competitiveness in international market. Comparative and competitive advantage are used to explain the tendency of countries to export or import commodities. We have used a combination of different indicators to explain the competitiveness of agricultural products in Kurdistan province.
Materials and Methods: The international competitiveness is a challenging phenomenon that has become increasingly important in today's world. Some economic theory emphasizes that change in comparative advantage should be a reflection of changes in the endowment and factors of products. Others attribute the major cause of world trade fluctuations to the technology gap, production factor and domestic costs. Institutional quality and human capital are the factors affecting world trade. Evidences that production and exports become more diversified-not more specialized- as per capita income rises has been interpreted to suggest that comparative advantage does not evolve as theory predicts and has been taken as a basis for a revival of industrial policy in developing countries.
This paper uses the Normalized Revealed Comparative Advantage (NRCA) and Constant Market Shares (CMS) indices to analyze the competitiveness of agricultural products of Kurdistan province for the years 2010-2016. CMS index is combination of three indictors: goods effects, market effects and competitiveness effects. These indexes are calculated for 32 agricultural items with relevance to the agricultural sector. The relevance basis for the classification of 32 agricultural items is the Harmonized Coding and classification system (HS).
Result and Discussion: The results show that Kurdistan province has the comparative advantage between 16 agricultural items comparing to other Iran' provinces. Among those 16 agricultural items, apple, tomato, cucumber, lettuce, other vegetables, pepper, potato, watermelon and eggplant have a high comparative advantage with the NRCA index by more than 0.0005. In the other words, the CMS index indicates the revealed competitive advantage of Kurdistan province in 8 agricultural items. These consist of eggplant, strawberry, animals-meat, garlic, carrot, onion, lettuce and oil and fruit seeds. Kurdistan province cannot convert comparative advantage of important products to competitive advantage. These important products are apple, tomato, cucumber, lettuce, potato and watermelon.
Results of market effect index emphasized that the Iraq market is appropriate for exporting products such as fresh animals, milk and dairy products, potato, piles and shallots, lettuce, carrots and turnips, cucumber, eggplant, currant, watermelon, dried fruits and grains. But Kurdistan province has not export advantage in all products. The results of this study suggested that it is beneficial for the framers in Kurdistan province to produce the products which have relative and comparative advantage and also try to move from comparative to competitive advantage.
Conclusion: This paper offers empirical consistency among five indices of competitiveness advantage to examine Kurdistan province' international advantage in agricultural items in the previous seven years. The results show that Kurdistan province has comparative advantage in many of agricultural products, but it is not successful in creating competitive advantage in target market. Kurdistan province must try to convert its comparative advantage of products to competitive advantage to develop its share of target markets.

Keywords

HS classification; Agricultural products; Comparative Advantage. Competitive Advantage; Kurdistan province

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