Philippine E-Journals

Causal Analysis on the Contribution of Agriculture Sector on Economic Growth: The Case of Malaysia and New Zealand

Nur Zaimah Ubaidillah

Discipline: Economics, Agriculture

 

Abstract:

A causal relationship exists between agriculture and economic growth. This study investigates the relationship between agriculture value added (AGRI) and real gross domestic product (RGDP) for the case of Malaysia and New Zealand. This study employs the annual time series data from 1977 to 2009. The study also briefly explains the difference in the agriculture policies in both countries. The methodology of this study adopted the Augmented Dickey Fuller and Dickey-Fuller unit root tests, Johansen-Juselius cointegration test and Vector Error Correction Model (VECM). Results show that there is no long run relationship for New Zealand and Malaysia. However, it is indicated that there exist a one-way causality from RGDP to AGRI in the case of Malaysia and two-way causality in the case of New Zealand in the short-run. Hence, the results proved that the economy for both countries, Malaysia and New Zealand are not dependent on the agriculture sector in the long-run.