Economics and Business
ISSN 2775-9237 (Online)
Published: 07 July 2020
Agriculture, Manufacturing and Economic Growth in India: A Co-integration Analysis
Imran Ali Baig, Md. Safdar Ali, Abdus Salam, Shah Mohd. Khan
Aligarh Muslim University (India)
Download Full-Text Pdf
Keywords: Agriculture Growth, ARDL Model, Economic Growth, Granger Causality, Manufacturing Growth, Stationarity
This study examined the most debatable question of the last three-decade, i.e., "Does the agriculture growth affect economic growth? "And also assess the long-run relationship between the variables, namely agriculture, manufacturing and economic growth in India with the use of annually data from 1966-to 2016. The study employed unit root and causality test suggested by the Dicky fuller, Phillips-Perron and Granger, respectively. Besides, ARDL techniques used to analyze the relationship among the variables, i.e., agriculture, manufacturing and economic growth for the short as well as a long period. As per outcome, the result shows that uni-directional causality running from manufacturing and economic growth to agricultural growth. Furthermore, uni-directional causality running from economic growth to manufacturing growth in India. Results also showed that bidirectional causal relationship between economic and agriculture growth. It can be concluded that this study support of a very famous statement "agriculture is the engine of economic growth" this statement is valid for the short period of time, but manufacturing contributed more than agriculture sector to the economic growth in the long run in India.
Adelman, I., 1984, ‘Beyond export-led growth’, World Development, 12, 9, pp. 937-949.
Aggrey, N. 2009. “Patterns of Agricultural Growth and Overall Growth of the Ugandan.” African Journal of Agricultural Research4: 1364–73.
Awokuse, Titus O, and Ruizhi Xie. 2015. "Does Agriculture Matter for Economic Growth in Developing Countries ?" 63: 77–99.
Baig, Imran Ali, and Abdus Salam. 2019. “Regional Disparities in Agricultural Development : An Analysis of Micro Level.” 6(1): 1154–60.
Bhagwati, J. and T. N. Srinivasan. 1975. Foreign Trade Regimes and Economic Development: India. New York: Columbia University Press.
Clark, C., 1940, The conditions of economic progress, 3rdedition, London, Macmillan.
Datt, Gaurav, and Martin Ravallion. 2002. “Poor Behind ?” 16(3): 89–108.
Dickey, David A, Wayne A Fuller, David A Dickey, and Wayne A Fuller. 1979. “Distribution of the Estimators for Autoregressive Time Series With a Unit Root Distribution of the Estimators for Autoregressive Time Series With a Unit Root.” 74(366): 427–31.
Dim, Chukwuma, and Uju Ezenekwe. 2013. “Does Agriculture Matter for Economic Development ? Empirical Evidence from Nigeria.” 1(1): 61–77.
Engle, Robert F, C W J Granger, B Y Robert F Engle, and C W J Grangeri. 1987. “Co-Integration and Error Correction : Representation , Estimation , and Testing Published by : The Econometric Society Stable URL : REFERENCES Linked References Are Available on JSTOR for This Article : You May Need To.” 55(2): 251–76.
Gabriel, Luciano Ferreira, Luciano Ferreira, Luiz Carlos, and De Santana Ribeiro. 2019. “Economic Growth and Manufacturing : An Analysis Using Panel VAR and Intersectoral Linkages” Structural Change and Economic Dynamics 49(April): 43–61.
Gardner, Bruce L. 2005. “Causes of Rural Economic Development.” Agricultural Economics 32(SUPPL. 1): 21–41.
Gemmell, N, T A Lloyd, and M Mathew. 2000. “Agricultural Growth and Inter-Sectoral Linkages.” 51(3).
Gollin, Douglas. 2009. “Agriculture as an Engine of Growth and Poverty Reduction : What We Know and What We Need to Know.”
Humphries, Hunter, and Stephen Knowles. 2010. “Does Agriculture Contribute to Economic Growth ? Some Empirical Evidence.” 6846.
Harris, R. and Sollis, R., 2003, Applied Time Series Modelling and Forecasting, West Sussex, Wiley.
Izuchukwu, Oji-okoro. 2011. “Analysis of the Contribution of Agricultural Sector on the Nigerian Economic Development.” World Review of Business Research 1(1): 191–200.
Johnston, By Bruce F, and John W Mellor. 1961. “American Economic Association The Role of Agriculture in Economic Development Author ( s ): Bruce F . Johnston and John W . Mellor Source : The American Economic Review , Vol . 51 , No . 4 ( Sep ., 1961 ), Pp . 566-593 Published by : American Economic Ass.” 51(4): 566–93.
Kuznets, S., 1966, Modern Economic Growth: Rate, Structure and Spread, New Haven, CT., Yale University Press.
Lewis, W. A., 1954, ‘Economic development with unlimited supplies of labor’, The Manchester School, 22, 2, pp. 139-191.
Matsuyama, K., 1992, ‘Agricultural Productivity, Comparative Advantage, and Economic Growth’, Journal of Economic Theory, 58, 2, pp. 317-334.
Oluwatoyese, Oyetade P. 2013. “Effect of Agricultural , Manufacturing And Services Sectors Performance In Nigeria , 1980-2011.” 4(20): 35–42.
Pesaran, M. and Shin, Y., 1999, ‘An autoregressive distributed lag modeling approach to cointegration analysis’, Strom, S., Econometrics and Economic Theory in the 20th Century: The Ragnar Frisch centennial Symposium, Cambridge, Cambridge University Press.
Peasaran.et.al. 2001. "Bounds Testing Approaches to the Analysis of Level Relationships Author ( s ): M . Hashem Pesaran , Yongcheol Shin and Richard J . Smith Source : Journal of Applied Econometrics , Vol . 16, No . 3, Special Issue in Memory of John Denis Sargan, 1924-199." 16(3): 289–326.
Phillips, P. C., & Perron, P. (1988). Testing for a unit root in time series regression. Biometrika, 75(2), 335-346.
Rahman, Zubaidur, and Md. Elias Hossain. 2014. “Role of Agriculture in Economic Growth of Bangladesh : A VAR Approach.” Journal of Business Studies Volume-7(November).
Ranis, G. and Fei, J. C. H., 1961, ‘A theory of economic development’, The American Economic Review, 51, 4, pp. 533-565.
Schiff, Maurice, Alberto Valdés, and World Bank. 1998. “Agriculture and the Macroeconomy.”
Schultz, T.W. (1964), Transforming traditional agriculture. Yale University Press, New Haven, CT. (Reprint edition, New York: Arno Press 1976)
Siami-namini, Sima. 2017. “Granger Causality Between Gross Domestic Product and Economic Sectors in Developing Countries : A Panel Co-Integration Approach.” 7(5): 53–58.
Singer, H., 1979, ‘Policy implications of the Lima target’, Industry and Development, 3, pp. 17-22.
Srikanth, P, and K Sathyanarayana. 2011. “Co-Integration and Causal Relationship between GDP and Agriculture Sector.” International Journal of Research in Commerce and Management 2(11): 66–68.
Steger, T., 2000, ‘Economic growth with subsistence consumption’, Journal of Development Economics, 62, pp. 343-361.
Lavorel, S., Storkey, J., Bardgett, R. D., de Bello, F., Berg, M. P., Le Roux, X., ... & Harrington, R. (2013). A novel framework for linking functional diversity of plants with other trophic levels for the quantification of ecosystem services. Journal of Vegetation Science, 24(5), 942-948.
Szirmai, Adam, and Bart Verspagen. 2015. "Manufacturing and Economic Growth in Developing Countries, 1950 – 2005." Structural Change and Economic Dynamics 34: 46–59.
Tiffin, Richard, and Xavier Irz. 2006. “Is Agriculture the Engine of Growth ?” 35: 79–89.
Timmer, C. P. (1988). The agricultural Transformation (Vol. I, pp. 276–328).
Tunali, Cigdem Borke, and Furkan Boru. 2019. “The Causality Effects of Manufacturing Sector on Some Macroeconomic Variables in Turkey.” Procedia Computer Science 158: 1109–13.
Vollrath, D., 2009, ‘The dual economy in long-run development’, Journal of Economic Growth, 14, 4, pp. 287-312.