Determinants of agricultural added value: The example of OECD countries

In the light of recent developments, reducing dependence and increasing the added value in the agricultural sector, whose importance comes to the forefront, has become one of the first targets set by the countries. In this respect, the aim of this study is to examine the factors that determine agricultural added value in OECD countries and to examine their effects on the share of agricultural value added in gross domestic product (GDP). In the study in which 35 OECD members were taken into consideration, the effectiveness of government policies and the effects of production technique on agricultural added value were examined by panel data analysis method for the period 2003-2019. The effectiveness of the implemented policies was represented by the "government efficiency index", while the production technique was represented by the "economic complexity index". Other independent variables used in the analysis were taken into account as the share of agricultural employment, agricultural exports and agricultural supports. In the study, firstly, it was determined whether there was any deviation in the model by using the varying variance, autocorrelation and inter-unit correlation tests. Then, the Hausman test was used to distinguish between the fixed effects model and the random effects model. Finally, the model was predicted with constant effects using resistive standard errors. The findings showed that the share of agricultural employment with the government efficiency index increased the share of agricultural value added in GDP in OECD countries, but the increase in economic complexity index, agricultural support and agricultural exports reduced the share of agricultural value added. In the analyzes where OECD members were divided into developed and developing countries and compared, it was concluded that the effects in question were different for two different country groups.