THE IMPACT OF PUBLIC INVESTMENT ON GROSS AGRICULTURAL INVESTMENT IN IRAQ DURING 1974-1994

Abstract

The objective of this research was to trace the impact of public investment expenditure on agricultural investment in Iraq through the analysis of functional relationships between different variables affecting investment. To avoid inflationary effects which happened at the end of the 1980 and 1990 of the last century fixed prices were used (1988) as a base year. The study of investment is considered one of the important issues particularly in the agriculture sector. The researchers have different opinions about the factors that could affect the gross investment(public and private).The applied researches in this area have indicated many important factors that affect the investment such as the rate of national income growth, and the rate of investment in capital stocks, and in return the investment itself could affect the size of National income and its stability. The results showed a weak relationship between public investment and agricultural investment during the study period .Accelerator value was 0.02.when investment as a component of aggregate demand used for agricultural investment it was found that it had a limited effect as the marginal propensity to invest was 0.3only . It was insignificant in private investment and fixed capital formation function for private sector. This was because investment were not directed to production investment directly and also financing investment was dependant completely on oil revenue .This was not accompanied by increasing the level of agricultural gross domestic product .This caused a decrease in average investment and consequently the fixed capital for agricultural sector. This requires reformulation of macroeconomic policies especially the expenditure policy in a way to serve the objectives of raising the level of agricultural capital formation as it is one of the important factors in increasing the rate of growth in agricultural production.