The Economic Determinants of Agricultural Value Added: A Panel Data Analysis on E7 Countries

The agricultural sector plays a crucial role in economic growth, employment, and food security. Although E7 countries (Brazil, China, India, Indonesia, Mexico, Russia, and Turkey) hold a significant share in global agricultural production, there is limited literature on the determinants of agricultural value added. This study aims to analyze the key economic factors affecting agricultural value added in E7 countries and assess the effectiveness of agricultural policies. The study covers the period 2001-2022 and employs the Panel ARDL method to examine long-term relationships. The findings indicate that the proportion of agricultural land and agricultural employment positively impact agricultural value added, whereas government expenditures may have a negative effect. Governments intervene in the agricultural sector through both direct and indirect measures. It can be suggested that direct income support policies for farmers may have the potential to increase dependency rather than enhance productivity. Although a detailed distinction regarding the implementation of direct payments during the analyzed period could not be made, the impact of government support is likely to vary depending on the type and implementation of the assistance provided. The results emphasize the need for more effective planning of agricultural support mechanisms. Redirecting public expenditures towards infrastructure investments, agricultural technology adoption, and rural development projects could enhance the sector’s long-term sustainability. Additionally, improving the transparency and measurability of support policies may increase their effectiveness and strengthen agricultural productivity. Policymakers should conduct a more detailed analysis of the effects of different support mechanisms to develop appropriate intervention strategies.