Analysis of Rice Import Trend and It's Economic Factors: Case of Iran

Rice comes second after wheat in Iran`s food consumption economy. However Iran is one of the greatest rice importer countries all over the world because of its rising population and recent growth in GDP. This paper presents an analysis of cointegration test between rice import and it`s economic factors over the period 1990-2011, employing Engle-Granger model. At first, Dickey-Fuller test shows that all variables are non-stationary at data level, so their first differences (that are stationary series) are used. Secondly, Engle-Granger testing presents existence of a long-run relationship between rice import and it`s economic factors including per capita GDP, foreign exchange rate and domestic price. At last, rice import model was estimated using OLS method which proves that all independent variables are significant at high level and the sign of coefficients are consistent with theoretical expectations So that import of rice positively correlates with Per capita GDP, domestic price and negatively correlates with freight exchange rate. With respect to increasing demand for rice, government should keep domestic policies for the rise of rice production so that the need for import falls in the long-run.