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Contribution Of Agriculture In The Ethiopian Economy: A Time-Varying Parameter Approach

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  • Alemu, ZG
  • Oosthuizen, K
  • van Schalkwyk, HD

Abstract

The objective of this study was to perform causality tests between agriculture and the rest of the economy using a Granger (1969) causality test procedure. Years of bi-directional causality were found between agriculture and manufacturing and services sectors before 1975. During this period, markets were major actors of economic activity and various positive measures, which encouraged the participation of the private sector in economic activity, were implemented. The contribution of agriculture to growth in the manufacturing and services sectors was not significant between 1978 and 1998. This can be attributed to two factors. Firstly, various policies that discouraged private sector participation in economic activity were implemented during the socialist era (between 1978 and 1992). Secondly, although markets were major actors of economic activity between 1992 and 1998, the economy was in a process of transition. Thus little can be expected in such a short time. The contribution of agriculture to growth inthe manufacturing sector has been improving since 1989. It is concluded that the freer agriculture is from policy constraints, the higher its contribution becomes to growth in the manufacturing and services sectors.

Suggested Citation

  • Alemu, ZG & Oosthuizen, K & van Schalkwyk, HD, 2003. "Contribution Of Agriculture In The Ethiopian Economy: A Time-Varying Parameter Approach," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 42(01).
    • Handle: RePEc:ags:agreko:246011
    DOI: 10.22004/ag.econ.246011
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    References listed on IDEAS

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    1. Perron, Pierre, 1989. "The Great Crash, the Oil Price Shock, and the Unit Root Hypothesis," Econometrica, Econometric Society, vol. 57(6), pages 1361-1401, November.
    2. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-438, July.
    3. Negassa, Asfaw & Jayne, Thomas S., 1998. "Vertical and Spatial Integration of Grain Markets in Ethiopia: Implications for Grain Markets," Food Security Collaborative Working Papers 55598, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    4. Unknown, 1961. "The Role of Agriculture in Economic Development," International Journal of Agrarian Affairs, International Association of Agricultural Economists, vol. 3(2), pages 1-1, April.
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    Cited by:

    1. Ademe, Alelign & Mehare, Abule, 2023. "Agricultural Transformation Performance and Inter-Sectoral Linkages in Ethiopia," Ethiopian Journal of Economics, Ethiopian Economics Association, vol. 32(01), April.

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