Journal of Agricultural Economics and Development, Vol. 1(2), pp. 006-013, January 2013  ©2013 Academe Research Journals

Full Length Research Paper

Key factors contributing to agricultural growth in Pakistan: An application of time series analysis

Fouzia Awan¹* and Usman Mustafa²

¹Lahore Garrison University, Lahore Cantt, Pakistan.

²Project Evaluation and Training Division, Pakistan Institute of Development Economics (PIDE), Islamabad, Pakistan.

*Corresponding author. E-mail: fouziawan@yahoo.com.

Accepted 5 December, 2012

Abstract

Agricultural productivity growth is vital for stimulating growth in all parts of the economy. Importance of this sector cannot be denied as it feeds people, used as a base for foreign trade and provides raw material for industry. Due to its enormous importance to national economy, high priority should be given to raise agricultural productivity and farm’s income. The objective of this study was to find out the key factors contributing towards agricultural growth in Pakistan. For this purpose, the study examined the impact of total cropped area, irrigation water, agricultural credit, import of pesticide and improved seed distribution on growth in Agricultural GDP (AGDP) for the period of 1970 to 2009. Total cropped area, irrigation water, improved seed distribution and import of pesticides have significant effects on the growth of AGDP. The long-run relationship between the Agricultural GDP and the total cropped area (million hectares) was positive for the Pakistani economy. The short run elasticity of the total cropped area with respect to AGDP was 0.47 and long run elasticity was 2.13. Thus, 1% increase in the total cropped area on average could enhance AGDP by 0.47% in the short run and 2.13% in the long run. Irrigation water has very critical position in farm production; 1% increase in availability of water on average boosted the AGDP by 0.93% in the long run while it fostered AGDP by 0.64% in the short run. Thus, it is evident that genuine economic development cannot be achieved without a prominent improvement of productivity in the agricultural sector.

Key words: Agriculture growth, agriculture GDP, agriculture productivity, agricultural credit, total cropped area, availability of water, import of pesticide.