Structural Changes in Iraqi Agricultural Sector and their Relationship with other Economic Sectors During the Period (1990 – 2015)

Submission Track Abstract The purpose of this research is to analyze the changes of the agricultural sector of the GDP and ratio of the agricultural employment , the total employment .In addition to the relation of the agricultural sector with other sectors in the economy of Iraq . It appears that economic growth ,measured as a growth rate in the real percapta GDP , and population growth cause a decrease in both. The contribution of the agricultural sector to the GDP and the agricultural employment measured in absolute terms and as a ratio to the total . Received : 26/11/2017 Final Revision : 2/1/2018


Introduction
Agricultural section had been many changes during the period 1990 to 2015. Most important . them was increasing in agricultural Product , but agricultural output fluctuation is not suitable with the importance of this sector since its contribution in the gross domestic product was poor. Ratio of agricultural workers to total workers decreased due to trend agricultural employee to search for work in other sectors and the most important of this is the general sector that represented in joining military forces and services sector. These changes are some of the changes that had been occurred throughout 1990 to 2015.

problem of Study
Role and importance of agricultural sector in gross domestic product (GDP) is to benefit the other economic sectors , which negatively affected on sefl-sufficiency ratio and food security in Iraq.

Aims of the research
This research aims to analyze the structural changes in the agricultural sector via: 1-Studying the relation between agricultural section contribution in to GDP and agricultural workers with each of economic growth and population growth and in terral flow the production factors. 2-Studying the structural relationship between agricultural sector and other economic sectors based on the regression approach . Regression approach is used to analyze the relation between this sector and the others. Inputs and outputs method are not used since there are not enough information about the inputs and the outputs tables, which could widely measure the changes from a year to another, which they may be not represcut the long run relationship . Importance of the study The importance on this study comes from the importance of the agricultural sector since it is the third importance sector after the oil and mining and services sector ones in GDP, and it obsession a high percentage of total labors. Study hypothesis This research assumes that the agricultural sector losses in favor of other economic sectors (oil and mining and services) of its contribution ratio in GDP and agricultural employment Agricultural sector in the Iraqi economy  839741  0748  2401144  2117  712043 0143 91141 248  0938441  7447 123941 0241  0009940  2144  70307.0  2111  198941 0841 91141 240  0389441  7240 191047 0841  0271448  2341  7811043  2111  109149 0243 011147 240  0971947  7148 319148 0443  0238947  2141  7319047  2114  774944  948 002247 248  2104341  7242 900141 0941  0231247  2149  7447344  2113  727741  341 001448 242  2871141  7741 911047 0341  0724847  2440  1217144  2119  773342  443 080141 248  2899141  7242  01283  0341  0130744  2941  1131247  2101  128047  949 071142 242  2710941  8348 0148741 8348  2182240  8247  1240848  2100  331341  141 834949 242 00103747  1147 2433242 044  0314144  0148  04738143  2102  999144  749 722041 241 08111747  1742 8112443 0149  2011144  0141  21280040  2108 0147247 1441 423341 140 021411141 3947 7827241 0341  2207842  041  070110840  2107 0213241 147 798140 241 00197140  1943  71881  2141  2110042  0141  09179947  2101  901141  947 890143 741  1012149  1741 7191447 7443  2010144  2248 Table (2) shows the differences in economic sectors contribution in GDP although the oil and mining sectors controlling the highest percentage in GDP forming. Agricultural sector has a great importance since it provides the essential commodities for consumption. Nevertheless, this sector does not meet the requirement of the Iraqi markets. There are fluctuations in the agricultural sector contribution. Contribution of this section in 2013 was (0.75%) according to the statistics of Ministry of Planning. This because: weakness in agricultural services, lacking of modern techniques, weak rangeland and fodders, and bad veterinary services, which led to a nutritional gap that mostly solves by importing a huge county of food goods and crops yields from the Arab states and the other countries of the world. The highest contribution percentage took place on 1991, which reached about (25%). This due to the encouragement of the previous government to this sector during imposed sanctions on Iraq by then. These percentages were continued decreased after 2013 to reaches about (9.4%) on 2014 because of neglecting this economic sector , tending of farmers to other careers other than the agricultural one. Manufacturing sector has a great importance in economies of the advanced countries, but the Iraqi economy still suffers of sharp weakness in this section although available capabilities are existed to get this sector developed. Transformative sector contributes about (4.0%) in 2015, which is a little contribution comparing to the importance of this sector. This is the cause of Iraqi poverty to infrastructure that supports these sorts industries in general. Oil and mining sectors have a huge importance contributing GDP of Iraq as compared to other economic sectors. Their contribute are about (89.4%) in 2013, which is very high compared to the agricultural sector. This represents the big role of oil in the Iraqi economy as the biggest contributor in forming the GDP and the Iraqi exports. Generally, the Iraqi economy have been under gone some structural imbalances affected its economic sectors. These sectors controls popped up through occupying the biggest part of the GDP, which had led to growth decline in other economic sectors like agriculture, manufacturing, and other sectors. Services sector comes after oil and mining sector according to the criteria of the relative importance of economic sectors. It contributes about (18%) in 2013. This percentage had been increased reaching about (47%) in 2015. Other sectors of electric, transportation, water, and structure sections had been contributed about (15%) in 2013, which is a high percentage as compared to the contribution of agricultural section. This led to reduction in the active role of agricultural section in the process of economic and social developments. Contribution percentage of these sectors increased to reach about (22%) in 2015. Table 2. represents the growth average of agricultural domestic product and gross domestic product and its percentage in this GDP. Table 2. Growth rates of ADP and GDP during the period of (1990 -2015) Year ADP million dollar Growth rate (%)of ADP
Agricultural domestic product increased in different ranges. Growth average increased in 2005 to be become (25.2%), which due to the cancelation of economic sanctions that were imposed on Iraq since 1990 till 2003.Afterward, these growth averages were fluctuated during the time series to become in the lower levels in 2010, which had a growth rate of (0.7%). This contribution of agriculture is very low and not enough to meet the growing needs of food. The weakened local production is because the problems that the domestic economy suffers of such as: lacking of developed agriculture equipment, spread of (epidemics, diseased, and pests)without control it, and dumping local markets with imported goods from international markets to solving food gap. These reasons and others are the cause of neglecting the Iraqi agricultural economic sector (2). GDP was increased, growth rate was (141.7%) in 2004, which is the highest percentage during time series, and then decreased to (0.7%) in 2010. This refers to an existing inability that was one of the consequences of the world financial crisis that financial markets faced by then. This crisis led to clear effect on oil prices and it's declined since the Iraqi economy relies mostly on oil exports. This percentage was improved because oil price rose again in 2014. Therefore, oil sector contribution increased in forming the GDP, which led to rising in growth rate once again to reaches about (10.1%) in 2014. Oil price declined in 2015 and negatively affected growth of the GDP by reaching just (6.8%). The dependence of Iraq almost completely on oil exports in forming GDP, makes GDP a hostage to high fluctuations of oil price. With this in mind, other economic sectors have to be given an important role especially the agricultural one in order to accelerating economic growth and doing a diversity of sources of income .  0991  949  2842  0990  0149  2849  0992  0040  2742  0998  0048  2743  0997  0241  2140  0991  0249  2141  0991  0849  2142  0994  0147  2441  0993  0447  2948  0999  2142  8142  2111  2247  8041  2110  2740  8844  2112  2144  8147  2118  2340  8140  2117  2143  8843  2111  0449  2947  2111  0441  2947  2114  0148  2344  2113  0148  2441  2119  0141  2440  2101  0242  2149  2100  0241  2141  2102  0049  2743  2108  0041  2749  2107  0041  2740  2101 0041 2741 Source: Ministry of Planning / Central Statistic Organization / different years.
Table (3), shows the fluctuations of growth rats averages of agricultural labors during (1990 -2015) due to tending to agricultural workers to quit and reaching for work in other fields. This led to increases in unemployment averages in this sector in reverse with the total worker average that rose because agricultural workers worked for other economic sectors. Unemployment was increased in this sector because of imposed economic sanctions on Iraq by the United Nation (Security Council). These sanctions stopped the Iraqi oil exports worldwide, which led to absence of oil resources that forming the backbone in financing the investments and providing opportunities to unemployed workers. Oil exports were limited just to program of oil for food and medicine since 1996.
Research methodology and theoretical framework Structural changes in the agricultural sector Pattern of economic development is known for its economic and social regular changes, which is associated with growth in real income as a measure of growth. Structural changes can be defined as changes that accompany economic growth measured by the growth rate of real income. Hence, some structural changes in the agricultural sector can be summarized as follows: 1-The agricultural sector's contribution to GDP has been declined. This is due to the growth of other economic sectors faster than the agricultural one. Especially since development models are mostly concentrated on the industrial sector as a leader sector. However, the contribution of the agricultural sector to GDP may increases in the second phase of economic growth.
2-Decreased agricultural employment as compared with the total employment due to the tending of agricultural labor to other sectors. 3-Changed pattern of agriculture from purposeful cultivation of self-sufficiency and non-market oriented to specialized agriculture oriented to marketing and foreign trade. Therefore, production methods would be changed to increase the use of modern agricultural machinery. Thus, agricultural production technology would vary at a rate that increases capital to labor. This change would also be reflected in the volatility of agricultural exports (3). Despite the importance of this subject, the comprehensive economic studies that tried to go into it are rear and almost none in Iraq. What are found of them, are not descriptive studies based on descriptive statistical analysis and does not promoted to the level of deep economic analysis. This study is based on the (Cheuery-Syrguin model) of structural changes, which explains the structural changes in an economy by per capita income, population and net internal inflows. This model is used in economic literature for this purpose, which provides a long-term analysis. On the other hand, Inputs -Outputs model is used for short-term analysis. Information leakage imposes its uses and does not permit the uses of the input-output model. Real per capita income rate is generally used as a measure of economic growth, which is the main limitation of structural changes in the agricultural sector, particularly. As one of the important demand factors that cause structural changes, any increase in per capita income leads to an increase in overall demand for agricultural goods and services in general. This would affect domestic investment and thus on agricultural production and agricultural employment. Population size reflects on economies impact, Boad wag. Population size increases would increase the overall demand for all goods and services, particularly locally produced goods including agricultural products and commodities. This leads to production expansion to cover demand increase that resulting of population increases. Composition of production changing would be done as a result towards demand changing of agricultural commodities, which allowing economies of scale to be exploited. This creates many employment opportunities that are an attraction for the workforce towards the most active economic sectors. Population size affects Sapply, population increase leads to increased labor in the long term, which helps decrease wage rates and then production costs, which affect the sectorial composition of GDP, (4).Net flow is one of the production factors, which can be measured by the difference between imports and exports. It is one of the limitations of structural changes that affect offers. Importation is the main source of capital. Therefore, the sectorial distribution of capital, which is reflected in the commodity and sector composition of imports, is reflected in the sectorial distribution work power. Capital flows affect market size because they represent external demand to domestic production, Boad wag (p. 18). Hence, it is possible to reform the structural changes in the agricultural sector as a statistical equation in the following double logarithmic format: Each of agricultural contribution output to GDP and the percentage of agricultural labor to total employment measure the major structural changes in the agricultural sector as a dependent variable that reflects the pattern of economic development in general and agricultural economic development in particular. The unbalanced development pattern, which focuses on non-agricultural sector as a leader sector (often the industrial sector), is reflected as a negative signs for each of factors a 1 and B 1 .The unbalanced development pattern also predicts a negative signs for the factor a 2 , B 2 . Treatments of a3 and B 3 may take both negative and positive signs. The replacement of labor by capital reduces the proportion of agricultural labor and increases agricultural production. However, these increases may be greater than growth rate in other sectors where B 3 is positive and agricultural growth sector is lower than the growth rate in other sectors and where B 3 is negative.
The structural relationship between the agricultural sector and other sectors The economic sectors of an economy are linked to each other through the dependence of these sectors on one another either directly or indirectly through the dependence of these sectors on similar goods or services as raw materials for the production process in each of these sectors. It can be said that the agricultural sector is linked to other economic sectors through direct dependence on them by its needs of energy and capital investments. Other economic sectors rely directly on agriculture to obtain production inputs as raw materials for the food and clothing industries. The indirect relationship between the economic sectors is based on the following: 1-The demand of agricultural products depends positively on generated incomes of agricultural production and other sectors of the economy. Demand is one of the important limitations of making structural change in the agricultural sector, as mentioned above. Production increase in other economic sectors leads to demand increase for agricultural products as a result, which changes agricultural production in a suitable manner for changing demand ( 5 ).
2-Dependence of agricultural projects on the sources of the available finance in the economy in general. Since the agricultural production projects need long-term loans in general and commercial banks would not do this because farmers cannot provide adequate guarantees, (6), the government is intervening to orient some financial resources into the agricultural sector through some policies that support the agricultural sector, such as the agricultural initiative. This affects other sectors as well as the agricultural one by influencing the implicit price of capital (interest rate). 3-Agricultural price support policies, whether by setting product prices or by subsidizing the prices of used raw materials in the agricultural sector, would affect relative prices and then on the agricultural and non-agricultural demands. This affects the production in all economic sectors, (7). In order to test the relationship between the agricultural sector and others, the following equations (3)  AGE: is the contribution of agricultural labor to total employment. Equation (3) shows the pattern of economic growth. Focusing on industry as a leading sector in the unbalanced development model will be reflected by a negative sign of the industrial sector contribution coefficient. Slower growth in the agricultural sector would be affected rather than the industrial one (Transmission log). The same is with the contribution of the service sector. Equation (4) refers to the flow of labor among economic sectors. Negative sign of contribution coefficient of the industrial sector and the service sector in GDP indicates the flow of agricultural labor to other sectors. The positive sign of these coefficients reflects the increase in agricultural employment (demand for employment in the agricultural sector). It is orient to contribution of other sectors and this indicates a decline in the agricultural sector(3).

Econometrical analysis and Results discussion
Structural changes in the Iraqi agricultural sector.
In order to identify the structural changes in the agricultural sector, it is possible to estimate the equations (1) and (2) by using the Ordinary least squares method relying on the official data as in Table  (4) Ln AGE Source: of researcher's preparation according to the tables1 and 3 Note: numbers between parentheses are t-values. * Significant at( 1%) confidence level. ** Significant at( 5% )connivance level.
1-Most of the estimated parameters were statistically significant at both of (1%) and (5%) confidence levels except for (LN pop) and (LN F) in the following equation. Therefore, changes in the contribution of the agricultural sector to the gross output and percentage of agricultural employment to total employment determine per capita of the real gross domestic product (prices of 1988) and population. Productive resources flow impact was not significant in making structural changes in the agricultural sector. 2-All estimated parameters were negative, except for the flow of productive resources (F), which reflecting the trend of structural changes in the agricultural sector that accompanied economic growth in Iraq. These changes are summarized by the low contribution of agriculture to GDP and the low rate of agricultural employment; this may not mean a decline in agricultural production. 3-The elasticity of agricultural employment ratio to per capita real GDP (y) was low (0.21). Agriculture contribution elasticity to GDP for the same variable (y) was (0.17). Increase of real per capita income by (1%) would be followed by a decline in agricultural labor ratio by (0.21% )and agricultural contribution in GDP decreases by (0.17%) as well. Population increases by 1% would be followed by a decrease in both of agriculture contribution in GDP by(1.14%)and percentage of agricultural employment by ( 0.78%).That is it; increase in population drives workers out of the agricultural sector due to supply excess in agricultural labor. 4-Coefficient of limitation of the agricultural sector contribution in GDP was high (92.3%). This indicates that only (8%) of the changes in the contribution of this agricultural sector, which are explained by the mentioned changes as limitation of structural changes. This can be considered as structural changes. The relatively low coefficient of (60%) indicates that (40%) of the changes in the contribution of agricultural labor to total employment are limitations to structural changes despite the decline in agricultural labor size. Population increases and economic growth were associated with a decline in both agriculture contribution to GDP and agricultural employment percentage to total employment. This reflects the huge focus on oil and mining sector as a leading sector in the Iraqi economy. Relationship between the agricultural sector and other sectors To clarify the relationship of the agricultural sector with other sectors, which is resulted from the pattern of Rolloved economic development, equations (3) and (4) can be estimated using the Ording feast squares method depending on the available statistical data. Table (5) shows these two estimated equations as following:  (5) that all of the estimated parameters differ statistically from zero with a (1%) significant level . One of the industrial contributing sector factors is negative, which is indicating that the focus on the industrial sector took place at neglecting agricultural sector. In terms of contribution to GDP, increasing in GDP by (1%) would be followed by a decrease in the contribution of the agricultural sector by (0.14%). This was done by a reduction in the agricultural employment percentage by (0.00058%).
This means that, the relationship between the contribution of the industrial sector and the contribution of the agricultural sector to GDP is inversed. Focusing on industrial sector as a leading sector explains this. Moreover, growth in the industrial sector accompanied with a slowdown (lagged) in the agricultural sector in the experiments (Transmission Lag). Table (5) shows a positive relationship with the services sector. The each contribution of the services sector to GDP increased by (1%) followed by an increase in the contribution of the agricultural sector by (1.34%) , but percentage of agricultural employment decreases in by (0.0005%). This may also be in line with development pattern in developing countries. 2-Coefficient of limitation was ( 87%) in the equation of the contribution of the agricultural sector in the gross output, and (29%) in the equation of the percentage of agricultural employment. This reflects the deletion of some sectors such as the construction sector to reduce the possibility of a multi-collegiality problem additional to other periodic factors. It is possible to summarize the structural changes in the agricultural sector that coupled with growth of economic and population by a decline in the agricultural employment percentage to total employment, and slowdown in contribution of the agricultural sector in GDP in a benefit of the industrial sector. This is consistent with Iraq's non-existent growth policy. It is also consistent with the low contribution of the agricultural sector to GDP with agricultural production growth. This growth rate was positively correlated with the rate of growth of the added value of the industrial sector as shown in the following equation. GA = 0.18 + 0.189 * GI…….. (5) (2.01) R 2 = 0.17 D-W = 2.51 F = 3.61 Where: * Significant at( 5%) confidence level. GA: Growth rate in the agricultural sector GI: Growth rate in the industrial sector Although determination coefficient decreases (R 2 =0.17), the estimated positive coefficient (growth coefficient of industrial production) that is significantly differ from zero, which is in line with the prevailing growth pattern in developing countries. Services sector had benefited of the drop in agricultural employment. According to equation (6), employment percentage coefficient of the service sector (SER) is negative and significantly differs from zero at (5%) significant level, while percentage of industrial labor has non-significant negative sign. This refers to that the self-demobilized agricultural labor may be merged into the service sector not in the industrial sector. This demand required problem solving by interring the imaginary variable that takes 2 values (0.1) years from ( 2004 -2015 ) showed (0) value after problem solving . the following results is gotten .