The effect of agricultural production on economic growth in Türkiye

Agricultural production fulfils diverse and critical functions, such as sustaining food production, supporting economic development, contributing to poverty reduction, protecting biodiversity, improving environmental management, promoting rural development and enhancing national security. Therefore, the interrelationship between agricultural production and economic growth has a much wider impact beyond food production. An accurate identification of the nature and dimensions of this relationship is crucial for the effective design of relevant policies. In this regard, the aim of this study is to determine the possible symmetrical and asymmetrical effects of agricultural production on economic growth in Turkiye for the period 1988-2021. For this purpose, we employ data on income per capita, agricultural production, labor force and domestic fixed capital investment and analyze the cointegrating relationship between them within the scope of linear lag distributed autoregressive (ARDL) and nonlinear ARDL (NARDL) models. Although the findings obtained within the scope of the linear model show that there is no cointegration relationship between the relevant variables, the results based on the asymmetric ARDL methodology confirm that the effect of agricultural production on economic growth is asymmetric. Specifically, the positive effect of increases in agricultural production on economic growth is stronger than the positive effect of decreases in agricultural production. The findings can be interpreted as the multiplier effect resulting from the increase in agricultural production is stronger than the increase in income caused by the contraction in agricultural production, which is replaced by the expansion in the industry and service sectors.