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 country’s exports. So any policy change for agriculture sector 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:
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. Agricultural land (% of land area): Agricultural land refers to the share of land area that is
arable, under permanent crops, and under permanent pastures.

3. GDP Growth (Annual %): This entry gives GDP growth on an annual basis adjusted for
inflation and expressed as a percent.

4. GDP per capita growth (annual %): GDP per capita is a measurement of how prosperous
a country is to each of its citizens.

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 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),
Agriculture land (% of land area) these variables have negative skewness. GDP growth (annual
%) and GDP per capita growth (annual %) have slightly positive skewness. Annual value added
(annual % of growth) have maximum standard deviation.

Scatters Diagrams:
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 Agriculture land (% of land
area).this show the negative effect on Agriculture value added (% of GDP).Figure 3 shows the
relationship between Agriculture value added (% of GDP) and GDP growth (annual %).it show
negative affect of GDP growth (annual %) to Agriculture value added (% of GDP).Figure 4 show
the relationship between Agriculture value added (% of GDP) and GDP per capita growth
(annual %).it also shows negative affect of GDP per capita growth (annual %) on Agriculture
value added (% of GDP).

From the above analysis we conclude that Agriculture value added (annual % of growth),
Agriculture land (% of land area), GDP growth (annual %) and GDP per capita growth (annual
%) 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