Review of Comparative Advantage of Major Agricultural Products in Fars Province

The agricultural sector in Iran has good potential for foreign currency income. But to enter the arena of international trade, requires having the necessary qualifications to join the World Trade Organization (WTO). This study is surveying competitive advantage of main agricultural products of Fars province using a variety of indicators. In this study, Domestic Resources Cost (DRC), Social Cost-Benefit (SCB) and Net Social Profit (NSP) for the major crops that have the largest area under cultivation using Policy Analysis Matrix (PAM) were estimated. In this study, In addition to the dollar exchange rate, the results based on euro and equilibrium exchange rates are determined and sensitivity analysis was performed. The results show that respectively, irrigated cucumber, irrigated tomatoes and irrigated corn have the greatest comparative advantage in the production. The irrigated wheat, rainfed wheat, irrigated barley, rainfed barley, irrigated red beans, rainfed lentils and irrigated cotton have not competitive advantage in the three exchange rates. The results of the sensitivity analysis show that this changing has not any effect on ranking and comparative advantage of products dramatically.

JEL Classification: Q28, Q18

Keywords: Comparative Advantage, Exchange Rate, Sensitivity Analysis, Fars Province