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AGRICULTURE EXPORT STIMULANT TO THE ECONOMIC AND FINANCIAL PERFORMANCE OF PAKISTAN
Corresponding Author(s) : Shaikh Muhammad Saleem
Humanities & Social Sciences Reviews,
Vol. 9 No. 2 (2021): March
Abstract
Purpose: The study examines how agricultural exports boost the economic growth of Pakistan in the long run and suggest policy implications during 1995-2018 using time series data.
Methodology: Principal Component Analysis is used to construct an agricultural export index consisting of rice, raw cotton, fruits, and vegetables as variables. This quantitative study checked the structural stability of the model with cumulative-sum & cumulative-sum of the square. Rolling window analysis highlights the long-run yearly effect of the coefficient of the model. The result of variance decomposition method proof bidirectional causality where robust result proof using Fully modified ordinary least square and Dynamic ordinary least square techniques. Unit root at first difference proof stationery whereas cointegration has a long-run relationship between agricultural export and economic growth.
Main Finding: The statistical estimation proofs the positive long-run association of agricultural exports with economic growth. Results explored a 26 percent increase in the economy of Pakistan by exporting agricultural goods.
Application of this Study: This study helps to develop the economies if they face problems of low agricultural productivity. The agricultural export is sensitive to domestic indicators, and domestic policy can promote agricultural export, and create new potential markets.
The originality of the Study: The study is suggested the agriculture techniques and their performance in developing economies.
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- Abbas, M. N. (2015). Energy crisis in Pakistan Naval Postgraduate School Monterey United States. The USA. https://apps.dtic.mil/sti/pdfs/AD1009049.pdf
- Akbar Zaidi, S. (2015). Issues in Pakistan's economy: a political economy perspective. Oxford University Press Catalogue.
- Chow, G. C. (1960). Tests of equality between sets of coefficients in two linear regressions. Econometrica: Journal of the Econometric Society, 28(3), 591-605. https://doi.org/10.2307/1910133 DOI: https://doi.org/10.2307/1910133
- Dawn. (2021). Sustainable agriculture in rain-fed areas. DAWN. Retrieved Aug/2021 from https://www.dawn.com/news/257612/sustainable-%20agriculture-in-rain-fed-areas
- Dickey, D., & Fuller, W. A. (1979). Distribution of the estimators for time series regressions with a unit root. Journal of the American Statistical Association, 74(366), 427-431. https://doi.org/10.2307/2286348 DOI: https://doi.org/10.1080/01621459.1979.10482531
- Engle, R. F., & Granger, C. W. (1987). Co-integration and error correction: representation, estimation, and testing. Econometrica: Journal of the Econometric Society, 55(2), 251-276. https://doi.org/10.2307/1913236 DOI: https://doi.org/10.2307/1913236
- FAO. (2021). Pakistan at a Glance. Food and Agriculture Organization of the United States. Retrieved Aug 2021 from http://www.fao.org/pakistan/our-office/pakistan-at-a-glance/en/
- Hye, Q. M. A., & Lau, W.-Y. (2015). Trade openness and economic growth: empirical evidence from India. Journal of Business Economics and Management, 16(1), 188-205. https://doi.org/10.3846/16111699.2 012.720587 DOI: https://doi.org/10.3846/16111699.2012.720587
- Jawaid, S. T., & Saleem, S. M. (2017). Foreign capital inflows and economic growth of Pakistan. Journal of Transnational Management, 22(2), 121-149. https://doi.org/10.1080/15475778.2017.1302784 DOI: https://doi.org/10.1080/15475778.2017.1302784
- Johansen, S., & Juselius, K. (1990). Maximum likelihood estimation and inference on cointegration—with applications to the demand for money. Oxford Bulletin of Economics and Statistics, 52(2), 169-210. https://doi.org/10.1111/j.1468-0084.1990.mp52002003.x DOI: https://doi.org/10.1111/j.1468-0084.1990.mp52002003.x
- Jordaan, A. C., & Eita, J. H. (2007). Export and economic growth in Namibia: a Granger causality analysis. South African Journal of Economics, 75(3), 540-547. https://doi.org/10.1111/j.1813-6982.2007.00132.x DOI: https://doi.org/10.1111/j.1813-6982.2007.00132.x
- Kiani, A., Ijaz, F., & Siddique, H. M. A. (2018). Determinants of Agricultural Exports of Pakistan: An Application of Gravity Model. Dialogue (Pakistan), 13(4), 467-478.
- Monk, T. H., & Brown, B. (1975). The effect of target surround density on visual search performance. Human Factors, 17(4), 356-360. https://doi.org/10.1177/001872087501700406 DOI: https://doi.org/10.1177/001872087501700406
- Pakistan Bureau of Statistics. (2021). Agriculture Statistics. Pakistan Bureau of Statistics, Government of Pakistan. Retrieved Aug/2021 from https://www.pbs.gov.pk/content/agriculture-statistics
- Pesaran, H. H., & Shin, Y. (1998). Generalized impulse response analysis in linear multivariate models. Economics Letters, 58(1), 17-29. https://doi.org/10.1016/S0165-1765(97)00214-0 DOI: https://doi.org/10.1016/S0165-1765(97)00214-0
- Phillips, P. C., & Hansen, B. E. (1990). Statistical inference in instrumental variables regression with I (1) processes. The Review of Economic Studies, 57(1), 99-125. https://doi.org/10.2307/2297545 DOI: https://doi.org/10.2307/2297545
- Phillips, P. C., & Perron, P. (1988). Testing for a unit root in time series regression. Biometrika, 75(2), 335-346. https://doi.org/10.2307/2336182 DOI: https://doi.org/10.1093/biomet/75.2.335
- Reardon, T., & Barrett, C. B. (2000). Agroindustrialization, globalization, and international development: An overview of issues, patterns, and determinants. Agricultural economics, 23(3), 195-205. https://doi.org/10.1016/S0169-5150(00)00092-X DOI: https://doi.org/10.1016/S0169-5150(00)00092-X
- Rehman, A., Chandio, A. A., Hussain, I., & Jingdong, L. (2017). Is credit the devil in agriculture? The role of credit in Pakistan's agricultural sector. The Journal of Finance and Data Science, 3(1-4), 38-44. https://doi.org/10.1016/j.jfds.2017.07.001 DOI: https://doi.org/10.1016/j.jfds.2017.07.001
- Saleem, S. M. (2017). does international financial integration spur economic growth? Evidence from Pakistan. Journal of Management Sciences, 4(1), 116-130. https://doi.org/10.20547/jms.2014.1704107 DOI: https://doi.org/10.20547/jms.2014.1704107
- Stock, J. H., & Watson, M. W. (1993). A simple estimator of cointegrating vectors in higher order integrated systems. Econometrica: Journal of the Econometric Society, 61(4), 783-820. https://doi.org/10.2307/2951763 DOI: https://doi.org/10.2307/2951763
- Svedberg, P. (1991). The export performance of sub-Saharan Africa. Economic Development and Cultural Change, 39(3), 549-566. https://doi.org/10.1086/451890 DOI: https://doi.org/10.1086/451890
- Thomas, V., & Nash, J. (1991). Reform of trade policy: recent evidence from theory and practice. The World Bank Research Observer, 6(2), 219-240. https://doi.org/10.1093/wbro/6.2.219 DOI: https://doi.org/10.1093/wbro/6.2.219
- Usman, M. (2016). Contribution of agriculture sector in the GDP growth rate of Pakistan. Journal of Global Economics, 4(2), 1-3. https://doi.org/10.4172/2375-4389.1000184 DOI: https://doi.org/10.4172/2375-4389.1000184
References
Abbas, M. N. (2015). Energy crisis in Pakistan Naval Postgraduate School Monterey United States. The USA. https://apps.dtic.mil/sti/pdfs/AD1009049.pdf
Akbar Zaidi, S. (2015). Issues in Pakistan's economy: a political economy perspective. Oxford University Press Catalogue.
Chow, G. C. (1960). Tests of equality between sets of coefficients in two linear regressions. Econometrica: Journal of the Econometric Society, 28(3), 591-605. https://doi.org/10.2307/1910133 DOI: https://doi.org/10.2307/1910133
Dawn. (2021). Sustainable agriculture in rain-fed areas. DAWN. Retrieved Aug/2021 from https://www.dawn.com/news/257612/sustainable-%20agriculture-in-rain-fed-areas
Dickey, D., & Fuller, W. A. (1979). Distribution of the estimators for time series regressions with a unit root. Journal of the American Statistical Association, 74(366), 427-431. https://doi.org/10.2307/2286348 DOI: https://doi.org/10.1080/01621459.1979.10482531
Engle, R. F., & Granger, C. W. (1987). Co-integration and error correction: representation, estimation, and testing. Econometrica: Journal of the Econometric Society, 55(2), 251-276. https://doi.org/10.2307/1913236 DOI: https://doi.org/10.2307/1913236
FAO. (2021). Pakistan at a Glance. Food and Agriculture Organization of the United States. Retrieved Aug 2021 from http://www.fao.org/pakistan/our-office/pakistan-at-a-glance/en/
Hye, Q. M. A., & Lau, W.-Y. (2015). Trade openness and economic growth: empirical evidence from India. Journal of Business Economics and Management, 16(1), 188-205. https://doi.org/10.3846/16111699.2 012.720587 DOI: https://doi.org/10.3846/16111699.2012.720587
Jawaid, S. T., & Saleem, S. M. (2017). Foreign capital inflows and economic growth of Pakistan. Journal of Transnational Management, 22(2), 121-149. https://doi.org/10.1080/15475778.2017.1302784 DOI: https://doi.org/10.1080/15475778.2017.1302784
Johansen, S., & Juselius, K. (1990). Maximum likelihood estimation and inference on cointegration—with applications to the demand for money. Oxford Bulletin of Economics and Statistics, 52(2), 169-210. https://doi.org/10.1111/j.1468-0084.1990.mp52002003.x DOI: https://doi.org/10.1111/j.1468-0084.1990.mp52002003.x
Jordaan, A. C., & Eita, J. H. (2007). Export and economic growth in Namibia: a Granger causality analysis. South African Journal of Economics, 75(3), 540-547. https://doi.org/10.1111/j.1813-6982.2007.00132.x DOI: https://doi.org/10.1111/j.1813-6982.2007.00132.x
Kiani, A., Ijaz, F., & Siddique, H. M. A. (2018). Determinants of Agricultural Exports of Pakistan: An Application of Gravity Model. Dialogue (Pakistan), 13(4), 467-478.
Monk, T. H., & Brown, B. (1975). The effect of target surround density on visual search performance. Human Factors, 17(4), 356-360. https://doi.org/10.1177/001872087501700406 DOI: https://doi.org/10.1177/001872087501700406
Pakistan Bureau of Statistics. (2021). Agriculture Statistics. Pakistan Bureau of Statistics, Government of Pakistan. Retrieved Aug/2021 from https://www.pbs.gov.pk/content/agriculture-statistics
Pesaran, H. H., & Shin, Y. (1998). Generalized impulse response analysis in linear multivariate models. Economics Letters, 58(1), 17-29. https://doi.org/10.1016/S0165-1765(97)00214-0 DOI: https://doi.org/10.1016/S0165-1765(97)00214-0
Phillips, P. C., & Hansen, B. E. (1990). Statistical inference in instrumental variables regression with I (1) processes. The Review of Economic Studies, 57(1), 99-125. https://doi.org/10.2307/2297545 DOI: https://doi.org/10.2307/2297545
Phillips, P. C., & Perron, P. (1988). Testing for a unit root in time series regression. Biometrika, 75(2), 335-346. https://doi.org/10.2307/2336182 DOI: https://doi.org/10.1093/biomet/75.2.335
Reardon, T., & Barrett, C. B. (2000). Agroindustrialization, globalization, and international development: An overview of issues, patterns, and determinants. Agricultural economics, 23(3), 195-205. https://doi.org/10.1016/S0169-5150(00)00092-X DOI: https://doi.org/10.1016/S0169-5150(00)00092-X
Rehman, A., Chandio, A. A., Hussain, I., & Jingdong, L. (2017). Is credit the devil in agriculture? The role of credit in Pakistan's agricultural sector. The Journal of Finance and Data Science, 3(1-4), 38-44. https://doi.org/10.1016/j.jfds.2017.07.001 DOI: https://doi.org/10.1016/j.jfds.2017.07.001
Saleem, S. M. (2017). does international financial integration spur economic growth? Evidence from Pakistan. Journal of Management Sciences, 4(1), 116-130. https://doi.org/10.20547/jms.2014.1704107 DOI: https://doi.org/10.20547/jms.2014.1704107
Stock, J. H., & Watson, M. W. (1993). A simple estimator of cointegrating vectors in higher order integrated systems. Econometrica: Journal of the Econometric Society, 61(4), 783-820. https://doi.org/10.2307/2951763 DOI: https://doi.org/10.2307/2951763
Svedberg, P. (1991). The export performance of sub-Saharan Africa. Economic Development and Cultural Change, 39(3), 549-566. https://doi.org/10.1086/451890 DOI: https://doi.org/10.1086/451890
Thomas, V., & Nash, J. (1991). Reform of trade policy: recent evidence from theory and practice. The World Bank Research Observer, 6(2), 219-240. https://doi.org/10.1093/wbro/6.2.219 DOI: https://doi.org/10.1093/wbro/6.2.219
Usman, M. (2016). Contribution of agriculture sector in the GDP growth rate of Pakistan. Journal of Global Economics, 4(2), 1-3. https://doi.org/10.4172/2375-4389.1000184 DOI: https://doi.org/10.4172/2375-4389.1000184