Journal of Food, Agriculture and Environment

Inter-sectoral linkages and economic growth in India: A multivariate cointegration approach

Author(s):

Imran A. Baig, Riyaz Alam, Md A. Salam

Recieved Date: 2021-01-18, Accepted Date: 2021-03-28

Abstract:

Agriculture sector predominantly explains the economic development and human wellbeing in Inda. The share of the agriculture sector has declined from 26.9 per cent in 1991 to 14.46 per cent in 2018 while industrial sector is relatively stable, 27.44 per cent in 1991 to 27.01 in 2018 . Economic growth and development cannot be separated from the role of the agricultural sector. Agriculture and industrial sectors both are inter-linked through backwards and forward linkages. The purpose of this study was to investigate the long-run equilibrium and causal relationship along with the direction of causality for the variables viz. economic growth, agriculture, industrial, human capital and investment using the ARDL Bounds Testing Framework, and dynamic VECM model. The study found credence to the long-run and causal relationships between the underlying variables. Longrun and short-run coefficient of agriculture, industrial sector, human capital, and investment suggests the positive impact on economic growth. Granger causality test indicated that one-way causality running from economic and agriculture to the human capital in the short run. Whereas, in the long-run unidirectional causality running from economic growth, industrial, human capital, investment to agriculture growth. To the best of our knowledge, this is the first study on the inter-sectoral linkages in the economic growth along with the human capital index in India by using ARDL and VECM techniques. The findings direct the policymakers to improve the performance of the agricultural sector through increase the public investment in agriculture education, modern technology and developed physical and social infrastructure if economic growth is to achieve.

Keywords:

ARDL bounds test, economic growth, human capital, inter-sectoral linkages, VECM, India

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Journal: Journal of Food, Agriculture and Environment
Year: 2021
Volume: 19
Issue: 2
Category: Environment
Pages: 64-70

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