HOW GLOBALIZATION IS RELATED TO ENERGY PRODUCTIVITY? (A MATHEMATICAL ANALYSIS ON IRAN’S AGRICULTURAL DATA)

Agriculture is recognized as a key economic sector for almost all developing nations including Iran. Nowadays, world economy has been highly integrated as economic performance of a given country is more susceptible to policies taken by other countries than four decades ago. So, investigating the possible impacts of this new worldwide phenomenon (globalization) would be a vital issue. This paper is an empirical examination of the association between globalization and energy productivity in the Iran's agriculture context by using time series econometrics techniques including causality and cointegration tests for the period 1967-2018. Main results confirm existence of a unidirectional causality from globalization to agricultural energy productivity. Other findings revealed that every one percent increase in globalization index is expected to lead in 0.75 percent rise in agricultural energy productivity in the long-run. The error correction coefficient is estimated at -0.25 implying that the effect of every shock imposed on the long-run equation would be vanished in just four years.


INTRODUCTION
Energy is categorized among the essential drivers of global development in general and developing nations' economic growth in particular [19,13,30,31,32]. Some ecological economists believe that in the biophysical growth model, energy acts as the most influential factor [27,23,24,26,27,29]. Also many studies have reported the impact of economic growth on export Int. J. Anal. Appl. 18 (6) (2020) 982 (growth-driven export) [20,1,14,33,34]. So, one may think of an association between energy use and export. In other words, trade is an important driver of economic growth and export enhancement promotes the economic activities and, thus, the energy demand [25,2,17,18,20,22].
On the other hand, globalization is currently a popular and controversial issue, though often remaining a loose and poorly-defined concept. Sometimes too comprehensively, the term is used to encompass increases in trade and liberalization policies as well as reductions in transportation costs and technology transfer. As far as its impact is concerned, discussion of globalization tends to consider simultaneously its effects on economic growth, employment and income distribution.
As many other developing nations, agriculture plays an important role in the Iranian economy. Based on recent data, it accounts for about 9.8% of gross domestic product, 22% of employment and more than 20% of non-oil exports (CBI 1 , 2018). Also as a member of OPEC 2 , Iran is an example of oil-dominant economies that has provided cheap energy to different sectors, including agriculture, for decades. It has been seeking non-oil export promotion and low dependency on oil export for three decades. So from policy making point of view it would be very informative to know how energy use has affected major economic variables (growth and export) of the sector.
Little empirical studies can be found dealing with the nexus between energy productivity (EP 3 ), and globalization (G) in the Iranian agriculture context. Considering the vital role of agriculture in the Iranian economy and rapid development of globalization in the world, the main motivation of current study can be defined as how globalization affects energy productivity in the sector. The remainder of the paper is structured as follows. Next section deals with methodology employed. Section 3 provides main obtained results and discusses, and finally section 4 presents conclusion. 1 Central Bank of the Islamic Republic of Iran 2 Organization of Petroleum Exporting Countries 3 Energy used per unit of output (agricultural value added in this study)

Econometric techniques
In this study the commonly used method in examination of the causal association between two series, namely; Granger causality test is applied. Considering two variables of interest including EP and G following equations are specified: where p, q, r, and s are lags, and 's are residuals assumed to possess all favorite statistical features. According to estimation results following alternatives are expected:

Data
All required information for estimation of equations 1-3 is taken from relevant sources including Ministry of Energy, Ministry of Agriculture and CBI. Furthermore annual data for the period spanning from 1967 to 2018 is used in estimation process. 1 Maximum Likelihood

RESULTS AND DISCUSSION
Descriptive statistics of variables of interest are presented in Table 1. As Table 1 shows, both variables have followed upward trend. Also, according to figures presented in Table 2 both two variables are non-stationary, so we are allowed to examine possible long-run equilibrium relationship between variables.  Table 3 portrays the output of JJ test of cointegration that clearly confirmed existence of one long-run equilibrium relationship.  Table 4 reports results of Granger causality test. Existence of one way causal relationship from globalization to energy productivity in agriculture is confirmed. It means that by getting Iranian economy more integrated into the world economy, energy productivity in agriculture will change. This is consistent with some previous studies in the field [9,28,14,3,4,5].

CONCLUSION
This study empirically dealt with the causal association between energy productivity and globalization in the context of Iranian agriculture. Annual information on two variables of interest is gathered from official national sources. Results obtained from application of Granger causality test reveals existence of a unilateral causal association from globalization to energy productivity in the agriculture sector. Further examinations showed presence of a long-run equilibrium relationship between globalization and energy productivity. Based on estimation results it is expected that one percent increase in globalization index lead to 0.75 raise in energy productivity. Considering direct and relatively strong effect of globalization on energy productivity at one hand and undeniable role of agriculture in Iranian economy at the other hand, taking measures to reduce susceptibility of domestic agriculture from foreign shocks (such as border measures and bilateral trade agreements) is highly recommended.