Contribution of Agriculture Value Adde1

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Contribution of Agriculture Value added

(% of GDP) towards Pakistani Economy.

Introduction:

Agriculture has been the mainstay for the economy of Pakistan since its independence (1947).

It is still contributing around 20% to GDP and 43% to total employment. Besides providing

employment to 43% labor force, 66% of the population of Pakistan living in rural areas,

directly or indirectly depends upon agriculture for their livelihood. It also provides raw

material to industry and contributes to countrys exports. So any policy change for agriculturesector will affect the economy and a large segment of population in the country. There has

been increasing use of modern machinery along with high yielding varieties of seed and

fertilizers which, has helped in increasing agriculture value-added growth and overall GDP

growth on one hand, and has squeezed the labour absorptive capacity on the other, especially

for those who are illiterate or have acquired only general education. Strong agricultural

growth has been a consistent feature of countries that have successfully managed to reduce

poverty. GDP growth generated in agriculture is, on average, four times more effective in

benefit ting the poorest half of the population than growth generated outside agriculture,

although this effect declines as countries get richer.

Research Question:

What are the sources of agriculture value added (% of GDP) towards Pakistani economy.

Objectives of Study:

This paper aims to determine the major factors of growth and their absolute and relative

shares in the agriculture value-added. This study depends upon five variables used to

investigate the contribution of agriculture value added (% of GDP) towards Pakistani

economy

Definition of variables.

Dependent variable:


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Agriculture Value added (% of GDP): Definition: Agriculture corresponds to ISIC divisions

1-5 and includes forestry, hunting, and fishing, as well as cultivation of crops and livestock

production. Value added is the net output of a sector after adding up all outputs and

subtracting intermediate inputs. It is calculated without making deductions for depreciation of

fabricated assets or depletion and degradation of natural resources. The origin of value added

is determined by the International Standard Industrial Classification (ISIC), revision 3. Note:

For VAB countries, gross value added at factor cost is used as the denominator.

Independent variables:

1. Agriculture Value added (% of Annual Growth): Annual growth rate for agricultural

value added based on constant local currency. Aggregates are based on constant 2000

U.S. dollars. Agriculture corresponds to ISIC divisions 1-5 and includes forestry,

hunting, and fishing, as well as cultivation of crops and livestock production. Value

added is the net output of a sector after adding up all outputs and subtracting

intermediate inputs. It is calculated without making deductions for depreciation of

fabricated assets or depletion and degradation of natural resources. The origin of

value added is determined by the International Standard Industrial Classification

(ISIC), revision 3.

2. Employment in agriculture (% of total employment):Employees are people who work

for a public or private employer and receive remuneration in wages, salary,

commission, tips, piece rates, or pay in kind. Agriculture corresponds to division 1

(ISIC revision 2) or tabulation categories A and B (ISIC revision 3) and includes

hunting, forestry, and fishing."

3. Employees, agriculture, female (% of female employment):As above

4. Employees, agriculture, male (% of male employment):As above

5. Agricultural raw materials exports (% of merchandise exports): Agricultural raw

materials comprise SITC section 2 (crude materials except fuels) excluding divisions

22, 27 (crude fertilizers and minerals excluding coal, petroleum, and precious stones),

and 28 (metalliferous ores and scrap).

6. Agricultural raw materials imports (% of merchandise imports):As above agriculture

raw material export


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Description of cases:

A sample period of 20 years has been selected for this study purpose from 1989 to 2008with

annual frequency.so we have 20 cases.

Source of Data:

http://data.worldbank.org/indicator

Quality of Data:

Quality of data is up to mark. No variable having missing values. Data source is reliable. All

of the independent variable has theoretical explanation.

Descriptive Analysis:

We used scatter diagrams to show relationship between dependent and independent variables.

Table of summary of Statistics analysis is also in this study to show the overall picture of

variables.

This descriptive analysis table shows the summary of variable used in this study. This

summary shows the picture of variables. Agriculture value added (% of GDP), Agriculture

value added (annual % of growth),Employment in agriculture (% of total employment), &

Employees, agriculture male (% of male employment) have negative skewness whereas

Employees, agriculture, female (% of female employment), Agricultural raw materials

exports (% of merchandise exports) & Agricultural raw materials imports (% of merchandise

imports) have positive skewness. Agricultural raw materials exports (% of merchandise

exports) have maximum standard deviation.
http://data.worldbank.org/indicatorhttp://data.worldbank.org/indicator


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Descriptive StatisticsN Range Minim

um

Maxim

um

Mean Std.

Deviation

Varian

ce

Skewness

Statisti

c

Statisti

c

Statisti

c

Statisti

c

Statisti

c

Std.

Error

Statistic Statisti

c

Statisti

c

Std.

Error

Agriculture, value

added (% of GDP)

20 6.98 20.33 27.31 24.490

0

.53212 2.37972 5.663 -.714 .512

Agriculture, value

added (annual %

growth)

20 17.01 -5.29 11.72 3.8860 .87962 3.93377 15.475 -.370 .512

Employment in

agriculture (% of

total employment)

19 9.00 42.10 51.10 46.410

5

.67251 2.93142 8.593 -.052 .524

Employees,

agriculture, female

(% of female

employment)

19 8.30 64.60 72.90 69.052

6

.63868 2.78396 7.750 .014 .524

Employees,

agriculture, male (%

of male employment)

19 12.00 36.40 48.40 42.494

7

.86208 3.75773 14.121 -.229 .524

Agricultural raw

materials exports (%

of merchandise

exports)

19 15.77 1.21 16.99 4.2525 .98188 4.27992 18.318 1.832 .524

Agricultural raw

materials imports (%

of merchandise

imports)

19 2.87 3.30 6.17 4.4694 .18736 .81668 .667 .576 .524

Valid N (list wise) 18

Figure # 1 Figure # 2


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Figure # 3 Figure# 4

Figure # 5 Figure # 6

Conclusion:

Figure 1 shows the relationship between Agriculture value added (% of GDP) and

Agriculture value added (annual % of growth).This diagram shows the positive effect of the

Agriculture value added (annual % of growth) on Agriculture value added (% of GDP).Figure

2 shows the relationship between Agriculture value added (% of GDP) and Employment in

agriculture (% of total employment).This show the positive effect on Agriculture value added

(% of GDP).Figure 3 shows the relationship between Agriculture value added (% of GDP)

and Employees, agriculture, female (% of female employment).It show positive affect of

Employees, agriculture, female (% of female employment) to Agriculture value added (% of

GDP).Figure 4 show the relationship between Agriculture value added (% of GDP) and

Employees, agriculture, male (% of male employment).It also shows positive affect of

Employees, agriculture, male (% of male employment) on Agriculture value added (% of


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GDP).Figure 5 shows the relationship between Agriculture value added (% of GDP) and

Agricultural raw materials exports (% of merchandise exports).It also shows positive affect

of Agricultural raw materials exports (% of merchandise exports) on Agriculture value added

(% of GDP).Figure 6 shows the relationship between Agriculture value added (% of GDP)

and Agricultural raw materials imports (% of merchandise imports).It shows negative affect

of Agricultural raw materials imports (% of merchandise imports) on Agriculture value added

(% of GDP).

From the above analysis we conclude that Agriculture value added (annual % of growth),

Employment in agriculture (% of total employment), Employees, agriculture, female (% of

female employment) Employees, agriculture, male (% of male employment), Agricultural

raw materials exports (% of merchandise exports) are important factors in contribution of

Agriculture Value added (% of GDP) towards Pakistani Economy.

References:

GROWTH AND PRODUCTIVITY IN PURVIEW OF TRANSITIONAL DYNAMICS IN

PAKISTAN AGRICULTURE SECTOR BY ABDUL HAMID and HAFIZ KHALIL

AHMAD

Pakistan Economic and Social Review Volume 47, No. 1 (Summer 2009), pp. 49-78

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Contribution of Agriculture Value Adde1