THE IMPACT OF INFRASTRUCTURE INVESTMENT ON PRODUCTIVITY IN IRAQI AGRICULTURE

This research has focused on the effect of public infrastructure on economic performance. A model of Iraqi agriculture's technology and behavior is constructed based on the total cost function framework. The model provides a decomposition of productivity growth into the components technical change, returns to scale, and public infrastructure. The empirical estimates indicate that public infrastructure investment provides a significant return to agriculture and augments productivity growth . Over the period 1970-2000, the impact of public infrastructure on productivity growth in Agricultural production is found to be positive, although it has been declining since the late 1980s. These results strongly suggest that a decline in public infrastructure investment can partly explain the observed decline in the productivity growth of Iraqi agriculture in the 1980s. Accordingly the mean total impact of public infrastructure on private purchased inputs in agriculture production was estimated . Over the whole sample period (1970-2000), public infrastructure is a complement to labour and intermediate inputs, while the opposite is true for private capital stock. This is an interesting result, as it implies that public infrastructure favours production processes that are traditional labour and intermediate inputs intensive as opposed to capital intensive production, thus supporting the lag in modernization and mechanization of Iraqi agriculture.