Agricultural Output and Economic Growth Nexus: A VECM Approach on Bangladesh

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Pervez M., Ahmed Z., Uddin M. S., Rahman M. M.

Tarim Bilimleri Dergisi, vol.30, no.4, pp.644-657, 2024 (SCI-Expanded) identifier identifier identifier

  • Publication Type: Article / Article
  • Volume: 30 Issue: 4
  • Publication Date: 2024
  • Doi Number: 10.15832/ankutbd.1388810
  • Journal Name: Tarim Bilimleri Dergisi
  • Journal Indexes: Science Citation Index Expanded (SCI-EXPANDED), Scopus, Academic Search Premier, CAB Abstracts, Food Science & Technology Abstracts, Veterinary Science Database, TR DİZİN (ULAKBİM)
  • Page Numbers: pp.644-657
  • Keywords: Agriculture, Industrial Output, GDP, VECM, Impulse Response Function, Variance Decomposition
  • Erciyes University Affiliated: Yes

Abstract

Agriculture is the engine of an economy. In Bangladesh, 50% of the entire labor force is employed in farming, and around 87% of rural families depend on agriculture for any part of their wages. Considering the importance of the agriculture sector in Bangladesh, the study examines the nexus between agricultural output and economic growth. In the finding of this causality, the VECM test was applied, and the long-run relationship between variables was found, where the rate of restoring the disequilibrium into equilibrium was 66.4%. The research applies the impulse response function and variance decomposition, where, in both cases, the result implies that the agricultural output is much more significant in economic growth than industrial output, meaning that to be a sustainable economy, the agriculture sector cannot be ignored. The study also provides insights to the policymakers that the agriculture sector should be given much more priority in terms of budget, and the academicians should do more research to develop sustainable agro-based products.