RELATIONSHIP AMONG AGRICULTURE, MANUFACTURING VALUE ADDED AND ECONOMIC GROWTH IN PAKISTAN

Abstract

Current study was conducted in the Department of Business Administration, National College of Business Administration and Economics, Multan Campus, Pakistan during 2019. The principal objective of the study is to observe the relationship of manufacturing value added (MVA), agriculture value added (AVA), and Pakistan’s economic growth. Existence of long run relation among AVA, MVA and economic growth is checked by using annual time series data for the period of 1972 to 2017 collected from World Bank. Results of the study show that (AVA), (MVA), domestic investment (DI), trade openness (TO) and labor force (LF) have long-run cointegrated relationship with GDP. The Granger causality analysis shows that there is bidirectional relationship between (AVA) and GDP. Similarly, TO and AVA have bidirectional relationship between each other. While the GDP granger cause (DI), (TO), (MVA) granger cause (AVA), (DI) granger cause (MVA), (TO) granger cause (MVA), (LF) granger cause (MVA). It is also found that there is Bi-variate co-integration among GDP, AVA, MVA, DI, TO and LF. It is concluded that improvement in agriculture value added and manufacturing value added means increase in economic growth of Pakistan. Additionally, study suggest that agriculture value addition could be improved by using the modern technology.

 KEYWORDS: GDP; Agriculture; manufacturing; value added; trade; economics; Pakistan