GROWTH AND RAW MATERIAL IMPORTS NEXUS: AN EMPIRICAL STUDY OF PAKISTAN’S AGRICULTURAL SECTOR

Abstract

A study was conducted at Applied Economics Research Centre, University of Karachi, Karachi, Pakistan during 2009. The objective was to test the import led agricultural growth hypothesis in case of Pakistan. Agriculture is a vital sector of Pakistan’s economy. It contributes significantly to its GDP and provides employment to bulk of labour force. The country also imports agricultural raw material to bridge the gap of demand and supply of this raw material. The data used in this study relate to the year 1971-2007. For statistical evidence this study employs the most reliable cointegration techniques like JJ cointegration, Gregory Hansen’s cointegration test, VAR-L, VAR-D and ECM. The results of JJ cointegration and Gregory Hansen’s test of cointegration confirmed long run association between agricultural growth and agricultural raw material imports, and bidirectional causality was found by using VAR-L, VAR-D and ECM.