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Oil, agriculture, and the public sector: linking intersector dynamics in Ecuador

Author

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  • Verner, Dorte
  • Fiess, Norbert M.

Abstract

In a recent paper, Fiess and Verner (2000) analyse sectoral growth in Ecuador and find significant long-run and short-run relationships between the agricultural, industrial and service sectors. They take this as evidence against the dual economy model which rules out a long-run relationship between agricultural and industrial output and show further that a more detailed picture of the growth process can be discovered, once the agricultural, industrial and service sectors are disaggregated further into intrasector components. This paper extends their initial results and provides insight from a multivariate cointegration analysis of intrasector components. The authors are able to identify three cointegrating relationships, each of which has its own meaningful economic interpretation: Two cointegration relationships capture the direct and indirect effects of the"petrolization"of the Ecuadorian economy. A third relationship clearly indicates a link between agriculture and industrial activity. Since this third cointegrating relationship seems to coincide in time with the trade liberalisation at the end of the 1980s, promoting agriculture appears to be an important way to promote sustainable economic growth in Ecuador.

Suggested Citation

  • Verner, Dorte & Fiess, Norbert M., 2003. "Oil, agriculture, and the public sector: linking intersector dynamics in Ecuador," Policy Research Working Paper Series 3094, The World Bank.
    • Handle: RePEc:wbk:wbrwps:3094
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    References listed on IDEAS

    as
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    4. Blunch, Niels-Hugo & Verner, Dorte, 1999. "Sector growth and the dual economy model - evidence from Cote d'Ivoire, Ghana, and Zimbabwe," Policy Research Working Paper Series 2175, The World Bank.
    5. Munisamy Gopinath & Terry L. Roe & Mathew D. Shane, 1996. "Competitiveness of U.S. Food Processing: Benefits from Primary Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(4), pages 1044-1055.
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    9. Fiess, Norbert M. & Verner, Dorte, 2001. "Intersectoral dynamics and economic growth in Ecuador," Policy Research Working Paper Series 2514, The World Bank.
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    Cited by:

    1. Nir Klein, 2010. "The Linkage between the Oil and Non-oil Sectors: A Panel VAR Approach," IMF Working Papers 2010/118, International Monetary Fund.

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