Econometric Analysis of Domestic Agricultural Output and Digital Economy Indicators in Iraq for the Period (2004-2025)

• Mustafa M. Awad1 Maher M. Shabab2

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This study aims to measure and diagnose the nature and extent of the impact of adopting circular economy practices and activities on enhancing and developing agricultural output indicators in Iraq for the period 2004-2025, with the goal of providing a scientific perspective that supports the transition towards sustainable agricultural development. The study employs a quantitative econometric approach using secondary time series data from governmental bodies and international organizations (such as the Iraqi Ministries of Agriculture and Planning, and the FAO and WTO). The econometric model measured the impact of independent variables representing circular economy indicators namely, the quantity of organic fertilizers processed (X1), bioenergy produced (X2), the share of renewable energy in total energy consumption (X3), and water use efficiency (X4), on the dependent variable of agricultural GDP at constant prices (Y). The econometric tests demonstrated the stationarity of the time series for the variables at the first differences (I(1)) and confirmed their cointegration using the Johansen-Josselius test, allowing for the application of the fully modified least squares (FMOLS) method for long-run estimation. The results showed a statistically significant positive impact of both water use efficiency (which was the most influential and scalable variable) and the quantity of organic fertilizers processed on agricultural output. While the production of bioenergy showed a significant negative impact due to direct competition for agricultural resources and the initial increase in costs, the renewable energy ratio variable did not register a significant impact due to the continued overall reliance on subsidized fossil fuels. The study reached a number of conclusions, most notably: confirming the study's main hypothesis regarding the statistically significant impact of circular economy practices on agricultural output development; identifying water use efficiency as the pivotal driver of growth in light of water scarcity and climate change; and the emergence of a non-linear slowdown in cumulative growth (TREND^2) subject to the law of diminishing returns due to infrastructure deterioration. Based on these results, the study offered several recommendations, the most important of which are: expanding support for the production and recycling of local organic fertilizers; regulating bioenergy projects to focus on non-consumable waste and refuse to avoid competition with food security; establishing a green finance fund to facilitate the acquisition of renewable energy technologies; restructuring policies supporting traditional fuels directed towards the agricultural sector in favor of clean energy; and a comprehensive investment shift towards closed irrigation networks to maximize water resource use efficiency.

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