Agriculture Value Added and Poverty Reduction in Pakistan: An Econometric Analysis

Abstract

Agriculture plays an important role to reduce poverty in developing countries. This study was conducted with the core objective to examine the role of agriculture in poverty reduction in Pakistan using time series data for the period 1972-2013. This study also analyses the role of services and industrial sectors to mitigate poverty in Pakistan. The study has applied Augmented Dickey-Fuller test to examine the data for stationary. On the basis of ADF test all the variables are stationary at first difference i.e. I (1). Johansen Co-integration test was also applied to assess the long-run relation between the variables. There are two co-integrating vectors. So the results show that all the sectors---agriculture, services and industrial---have long-run relation with poverty reduction. Results of error correction model confirm the long-run relation of agriculture, services and industrial sectors with poverty reduction.

Keywords: Agriculture, Poverty Reduction, co-integration, VECM, Pakistan.