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Sectoral Linkages; Identifying the Key Growth Stimulating Sector of the Pakistan Economy

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  • Rashid, Abdul

Abstract

This paper investigates growth linkages among agriculture, industry and different segments of the service sector with a view to identifying the main growth stimulating sector with the highest level of backward and forward linkages in the economy. Time series data is used for the period 1971 to 2002. We estimate growth linkages through OLS regression analysis, also the Granger causality test is used to determine the direction of causality between growth of the different sectors of the economy for Pakistan. Our results suggest that the industrial sector plays an important role in determining the overall growth rate of the economy. The industrial GDP growth rate and service sector GDP growth rate both cause the growth rate of agricultural GDP. This verifies the neoclassical arguments that the higher productivity techniques in industry, (particularly in manufacturing) tend to spill over to agriculture, so encouraging convergent tendencies in sectoral productivity levels.

Suggested Citation

  • Rashid, Abdul, 2004. "Sectoral Linkages; Identifying the Key Growth Stimulating Sector of the Pakistan Economy," MPRA Paper 27210, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:27210
    as

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    File URL: https://mpra.ub.uni-muenchen.de/27210/1/MPRA_paper_27210.pdf
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    References listed on IDEAS

    as
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    4. Simon Kuznets & Elizabeth Jenks, 1961. "Capital in the American Economy: Its Formation and Financing," NBER Books, National Bureau of Economic Research, Inc, number kuzn61-1, January.
    5. Chamberlain, Gary, 1982. "The General Equivalence of Granger and Sims Causality," Econometrica, Econometric Society, vol. 50(3), pages 569-581, May.
    6. Granger, C. W. J., 1988. "Some recent development in a concept of causality," Journal of Econometrics, Elsevier, vol. 39(1-2), pages 199-211.
    7. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    8. Amemiya, Takeshi, 1980. "Selection of Regressors," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 21(2), pages 331-354, June.
    9. Dowrick, Steve, 1989. "Sectoral change, catching up and slowing down : OECD post-war economic growth revisited," Economics Letters, Elsevier, vol. 31(4), pages 331-335, December.
    10. Hsiao, Cheng, 1981. "Autoregressive modelling and money-income causality detection," Journal of Monetary Economics, Elsevier, vol. 7(1), pages 85-106.
    11. Sangeeta Dhawan & K. K. Saxena, 1992. "Sectoral Linkages and Key Sectors of the Indian Economy," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 27(2), pages 195-210, July.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Growth; Sectoral Linkages; Pakistan;

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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