IDEAS home Printed from https://ideas.repec.org/p/cde/cdewps/35.html

Does The Dog Wag The Tail Or The Tail The Dog? Cointegration Of Indian Agriculture With Non-Agriculture

Author

Listed:
  • Sunil Kanwar

    (Delhi School of Economics)

Abstract

An oft-repeated refrain in the development literature has been the 'neglect' of the agricultural sector vis-a-vis the industrial sector in the development process of the less developed economies. Since infrastructure, is crucially linked to both agricultural and industrial development, poor instructure development may make it appear as if slow agricultural growth has caused slow industrial growth. Further, in estimating the relation between agriculture and industry, the former should not be assumed to be exogenous; rather, this should first be established. Moreover, given that most time series are trended, conventional regression techniques may yield spurious regressions and significance tests. To circumvent these various problems, we study the cointegration of the different sectors of the Indian economy in a multivariate vector auto regression framework.

Suggested Citation

  • Sunil Kanwar, 1996. "Does The Dog Wag The Tail Or The Tail The Dog? Cointegration Of Indian Agriculture With Non-Agriculture," Working papers 35, Centre for Development Economics, Delhi School of Economics.
    • Handle: RePEc:cde:cdewps:35
    as

    Download full text from publisher

    File URL: http://www.cdedse.org/pdf/work35.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Johansen, Søren & Juselius, Katarina, 1992. "Testing structural hypotheses in a multivariate cointegration analysis of the PPP and the UIP for UK," Journal of Econometrics, Elsevier, vol. 53(1-3), pages 211-244.
    2. Hollis Chenery† & T.N. Srinivasan (ed.), 1988. "Handbook of Development Economics," Handbook of Development Economics, Elsevier, edition 1, volume 1, number 1.
    3. Rangarajan, C., 1982. "Agricultural growth and industrial performance in India," Research reports 33, International Food Policy Research Institute (IFPRI).
    4. Granger, C. W. J. & Newbold, Paul, 1986. "Forecasting Economic Time Series," Elsevier Monographs, Elsevier, edition 2, number 9780122951831 edited by Shell, Karl.
    5. Sims, Christopher A, 1980. "Macroeconomics and Reality," Econometrica, Econometric Society, vol. 48(1), pages 1-48, January.
    6. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
    7. Osterwald-Lenum, Michael, 1992. "A Note with Quantiles of the Asymptotic Distribution of the Maximum Likelihood Cointegration Rank Test Statistics," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 54(3), pages 461-472, August.
    8. Dolado, Juan J. & Lütkepohl, Helmut, 1994. "Making Wald Tests Work for Cointegrated Var Systems," SFB 373 Discussion Papers 1994,44, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
    9. World Bank, 1982. "World Development Report 1982," World Bank Publications - Books, The World Bank Group, number 5965, April.
    10. Robert Engle & Clive Granger, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    11. Phillips, P.C.B., 1986. "Understanding spurious regressions in econometrics," Journal of Econometrics, Elsevier, vol. 33(3), pages 311-340, December.
    12. Peter Timmer, C., 1988. "The agricultural transformation," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 1, chapter 8, pages 275-331, Elsevier.
    13. Sawant, S. D., 1983. "Investigation of the Hypothesis of Deceleration in Indian Agriculture," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 38(4), October.
    14. Isher Judge Ahluwalia & C. Rangarajan, 1989. "A Study of Linkages between Agriculture and Industry: the Indian Experience," International Economic Association Series, in: Jeffrey G. Williamson & Vadiraj R. Panchamukhi (ed.), The Balance between Industry and Agriculture in Economic Development, chapter 10, pages 219-250, Palgrave Macmillan.
    15. Krishna, Raj, 1982. "Some Aspects of Agricultural Growth, Price Policy and Equity in Developing Countries," Food Research Institute Studies, Stanford University, Food Research Institute, vol. 18(3), pages 1-42.
    16. Hall, S G, 1989. "Maximum Likelihood Estimation of Cointegration Vectors: An Example of the Johansen Procedure," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 51(2), pages 213-218, March.
    17. Mohan Rao, J. & Caballero, Jose Maria, 1990. "Agricultural performance and development strategy: Retrospect and prospect," World Development, Elsevier, vol. 18(6), pages 899-913, June.
    18. Kanwar, Sunil, 2000. "Does the Dog Wag the Tail or the Tail the Dog? Cointegration of Indian Agriculture with Nonagriculture," Journal of Policy Modeling, Elsevier, vol. 22(5), pages 533-556, September.
    19. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kaya, Ozgur & Kaya, Ilker & Gunter, Lewell F., 2008. "The Impact of Agricultural Aid on Agricultural Sector Growth," 2008 Annual Meeting, February 2-6, 2008, Dallas, Texas 6743, Southern Agricultural Economics Association.
    2. Pina, Gilson M. G., 2013. "Mudança estrutural e a relação entre os setores em Cabo Verde [Structural change and the sectoral linkage in Cape Verde]," MPRA Paper 46015, University Library of Munich, Germany.
    3. Kumawat, Lokendra, 2010. "Effect of Rainfall on Seasonals in Indian Manufacturing Production: Evidence from Sectoral Data," MPRA Paper 25300, University Library of Munich, Germany.
    4. Richard Tiffin & Xavier Irz, 2006. "Is agriculture the engine of growth?," Agricultural Economics, International Association of Agricultural Economists, vol. 35(1), pages 79-89, July.
    5. RAMDE, Fousseni & LO, Sérigne Bassirou, 2015. "Le Role Du Secteur Agricole Dans L’Economie Du Senegal [The Role Of The Agricultural Sector In The Senegal Economy]," MPRA Paper 81906, University Library of Munich, Germany.
    6. Eze Simpson Osuagwu, 2020. "Empirical Evidence of a Long-Run Relationship Between Agriculture and Manufacturing Industry Output in Nigeria," SAGE Open, , vol. 10(1), pages 21582440198, January.
    7. Joao Gaspar & Gilson Pina & Marta Simoes, 2014. "Agriculture in Portugal: linkages with industry and services," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement, INRA Department of Economics, vol. 95(4), pages 437-471.
    8. de Souza, Joao Paulo A., 2015. "Evidence of growth complementarity between agriculture and industry in developing countries," Structural Change and Economic Dynamics, Elsevier, vol. 34(C), pages 1-18.
    9. Ansari, S. A. & Khan, W., 2018. "Relevance of Declining Agriculture in Economic Development of South Asian Countries: An Empirical Analysis," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 10(2).
    10. Joao Paulo A. de Souza, 2017. "Biased Technical Change in Agriculture and Industrial Growth," Metroeconomica, Wiley Blackwell, vol. 68(3), pages 549-583, July.
    11. Subramaniam, Vijay & Reed, Michael R., 2009. "Agricultural Inter-Sectoral Linkages and Its Contribution to Economic Growth in the Transition Countries," 2009 Conference, August 16-22, 2009, Beijing, China 51586, International Association of Agricultural Economists.
    12. Dorward, Andrew & Kydd, Jonathan & Morrison, Jamie & Urey, Ian, 2004. "A Policy Agenda for Pro-Poor Agricultural Growth," World Development, Elsevier, vol. 32(1), pages 73-89, January.
    13. Chebbi, Houssem Eddine & Lachaal, Lassaad, 2007. "Agricultural Sector and Economic Growth in Tunisia: Evidence from Co-integration and Error Correction Mechanism," 103rd Seminar, April 23-25, 2007, Barcelona, Spain 9416, European Association of Agricultural Economists.
    14. Irandoust, Manuchehr, 2022. "Industrial growth versus agricultural growth in eight post-communist countries," Structural Change and Economic Dynamics, Elsevier, vol. 62(C), pages 529-537.
    15. Harish Mani & G. Bhalachandran & V. N. Pandit, 2011. "Public Investment In Agricultural And Gdp Growth-- Another Look At The Inter Sectoral Linkages And Policy Implications," Working papers 201, Centre for Development Economics, Delhi School of Economics.
    16. Zhong, Chao & Du, Jiaxin & Cai, Hongbo & Fan, Qi, 2025. "Does China's overseas agricultural aids contribute to global food security?," China Economic Review, Elsevier, vol. 93(C).
    17. Lee, Hiro & Roland-Holst, David, 2000. "Trade and Transmission of Endogenous Growth Effects: Japanese Economic Reform as an Externality for East Asian Economies," Conference papers 330892, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    18. Kanwar, Sunil, 2000. "Does the Dog Wag the Tail or the Tail the Dog? Cointegration of Indian Agriculture with Nonagriculture," Journal of Policy Modeling, Elsevier, vol. 22(5), pages 533-556, September.
    19. de Souza, Joao Paulo A., 2014. "Growth Complementarity Between Agriculture and Industry: Evidence from a Panel of Developing Countries," UMASS Amherst Economics Working Papers 2014-11, University of Massachusetts Amherst, Department of Economics.
    20. Deepak Kumar Behera, 2012. "Economic Growth And Sectoral Linkages: Empirical Evidence From Odisha," Journal of Regional Development and Planning, Rajarshi Majumder, vol. 1(2), pages 91-102.
    21. Md Shajedur Rahaman & Mohammad Chhiddikur Rahman & Md Abdur Rouf Sarkar & Mohammad Ariful Islam, 2023. "Contribution of agriculture subsectors on economic growth in Bangladesh: An application of the ARDL method," Economics Bulletin, AccessEcon, vol. 43(1), pages 245-264.
    22. Tulus Tambunan, 2005. "Economic Growth, Appropriate Policies and Poverty Reduction in a Developing Country," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 6(1), pages 59-78, March.
    23. Pami Dua & Lokendra Kumawat, 2007. "Modelling Seasonal Dynamics in Indian Industrial Production--An Extention of TV-STAR Model," Working papers 162, Centre for Development Economics, Delhi School of Economics.
    24. Seema Bathla & Alwin D’souza, 2015. "Inter-sectoral Productivity Differentials in India," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 16(1), pages 82-102, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Levent KORAP, 2008. "Exchange Rate Determination Of Tl/Us$:A Co-Integration Approach," Istanbul University Econometrics and Statistics e-Journal, Department of Econometrics, Faculty of Economics, Istanbul University, vol. 7(1), pages 24-50, May.
    2. Charles G. Renfro, 2009. "The Practice of Econometric Theory," Advanced Studies in Theoretical and Applied Econometrics, Springer, number 978-3-540-75571-5.
    3. Cushman, David O. & Sang Sub Lee & Thorgeirsson, Thorsteinn, 1996. "Maximum likelihood estimation of cointegration in exchange rate models for seven inflationary OECD countries," Journal of International Money and Finance, Elsevier, vol. 15(3), pages 337-368, June.
    4. Dimitris Georgoutsos & Georgios Kouretas, 2004. "A Multivariate I(2) cointegration analysis of German hyperinflation," Applied Financial Economics, Taylor & Francis Journals, vol. 14(1), pages 29-41.
    5. Mansor H. IBRAHIM, 2007. "The Yen‐Dollar Exchange Rate And Malaysian Macroeconomic Dynamics," The Developing Economies, Institute of Developing Economies, vol. 45(3), pages 315-338, September.
    6. M.T. Alguacil & V. Orts, "undated". "A multivariate cointegrated model testing for temporal causality between exports and outward FDI: The Spanish case," Studies on the Spanish Economy 50, FEDEA.
    7. M. T. Alguacil & V. Orts, 2003. "Inward Foreign Direct Investment and Imports in Spain," International Economic Journal, Taylor & Francis Journals, vol. 17(3), pages 19-38.
    8. Norman J. Morin, 2006. "Likelihood ratio tests on cointegrating vectors, disequilibrium adjustment vectors, and their orthogonal complements," Finance and Economics Discussion Series 2006-21, Board of Governors of the Federal Reserve System (U.S.).
    9. Yap, Wei Yim & Lam, Jasmine S.L., 2006. "Competition dynamics between container ports in East Asia," Transportation Research Part A: Policy and Practice, Elsevier, vol. 40(1), pages 35-51, January.
    10. Jacint Balaguer & Manuel Cantavella-Jorda, 2002. "Tourism as a long-run economic growth factor: the Spanish case," Applied Economics, Taylor & Francis Journals, vol. 34(7), pages 877-884.
    11. Arize, A. C., 1996. "Cointegration test of a long-run relation between the trade balance and the terms of trade in sixteen countries," The North American Journal of Economics and Finance, Elsevier, vol. 7(2), pages 203-215.
    12. Badiane, Ousmane, 1990. "The Role of Agriculture and Trade In Economic Development," 1990 Symposium, Agricultural Restructuring in Southern Africa, July 24-27, 1990, Swakopmund, Namibia 183495, International Association of Agricultural Economists.
    13. Pedro M. G. Martins, 2010. "Fiscal Dynamics in Ethiopia: The Cointegrated VAR Model with Quarterly Data," Working Paper Series 0910, Department of Economics, University of Sussex Business School.
    14. Jorge Dresdner & Leonardo Letelier, 1997. "Cointegración de los Salarios Agregados en Chile: 1980-3-1995-3," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 34(101), pages 49-70.
    15. Ericsson, Neil R & Hendry, David F & Mizon, Grayham E, 1998. "Exogeneity, Cointegration, and Economic Policy Analysis," Journal of Business & Economic Statistics, American Statistical Association, vol. 16(4), pages 370-387, October.
    16. Eleni Constantinou & Avo Kazandjian & George Kouretas & Vera Tahmazian, 2005. "Cointegration, causality and domestic portfolio diversification in the Cyprus Stock Exchange," Working Papers 0522, University of Crete, Department of Economics.
    17. Eleni Constantinou & Avo Kazandjian & Georgios P. Kouretas & Vera Tahmazian, 2008. "Common Stochastic Trends Among The Cyprus Stock Exchange And The Ase, Lse And Nyse," Bulletin of Economic Research, Wiley Blackwell, vol. 60(4), pages 327-349, October.
    18. Arize, A. C., 1995. "Trade flows and real exchange-rate volatility: an application of cointegration and error-correction modeling," The North American Journal of Economics and Finance, Elsevier, vol. 6(1), pages 37-51.
    19. Song, Chi-Young, 1997. "The Real Exchange Rate and the Current Account Balance in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 11(2), pages 143-184, June.
    20. H. Peter Boswijk & Jurgen A. Doornik, 2004. "Identifying, estimating and testing restricted cointegrated systems: An overview," Statistica Neerlandica, Netherlands Society for Statistics and Operations Research, vol. 58(4), pages 440-465, November.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cde:cdewps:35. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sanjeev Sharma (email available below). General contact details of provider: https://edirc.repec.org/data/cdudein.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.