Accelerating Factors of Public Investment in Agriculture Sector of Pakistan

Gulzar Ali


This study is an endeavor to investigate the accelerating factors for public investment in Agriculture Sector of Pakistan that might help in retaining the growth of agriculture sector. The time series data for the period of 1981-2014 was selected. In analytical techniques the Augmented Dicky-Fuller unit root test for the stationarity of data, Johansen Co-integration for co-integrating factor and Vector Error Correction Model (VECM) were applied for the regression analysis. The results obtained from the regression analysis of the study shows that   Value-Added in Agriculture Sector (Vagri), Credit Available to Agriculture Sector (CAagri), Capital Stock in Agriculture Sector (Kstock ), Population Growth Rate (Popg ), Dummy variable for the political stability and favorable condition (Dps) and Lagged Investment in Public Agriculture Sector (Iga(-1)) has significant and positive effect, whereas  Index of Price of Capital (Ipk ) is significant negative impact on the Public Investment in Agriculture Sector of Pakistan.  The study recommends that some incremental efforts required for the government to invest in agriculture sector through national policies and food security accompanying long term planning to enhance the growth of agriculture sector in Pakistan.


Public Investment, Agriculture Sector, Investment Accelerator Model, Augmented Dicky-Fuller, Johansen Co-integration and Vector Error Correction Model.

Full Text:



Fan, S., P. Hazell, and Haque T., (2000), “Targeting Public Investments by Agroecological Zone to Achieve Growth and Poverty Alleviation Goals in Rural India.” Food Policy 25 (4): 411–428.

Fan, S., P. Hazell, and Thorat S., (2000), “Government Spending, Agricultural Growth, and Poverty in Rural India.” American Journal of Agricultural Economics 82 (4): 1038–1051.

Fan, S., B. Yu, and S. Jitsuchon (2008), “Does Allocation of Public Spending Matter in Poverty Reduction? Evidence from Thailand.” Asian Economic Journal 22 (4): 411–430.

Fan, S., and X. Zhang (2008), “Public Expenditure, Growth and Poverty Reduction in Rural Uganda.” African Development Review 20 (3): 466–496.

Fan, S., B. Yu, and A. Saurkar (2008), “Public Spending in Developing Countries: Trends, Determination, and Impact.” In Public Expenditures, Growth, and Poverty, 20–55, edited by S. Fan. Baltimore, MD: Johns Hopkins University Press.

Foster, A., and M. Rosenzweig (1995), “Learning by Doing and Learning from Others: Human Capital and Technical Change in Agriculture.” Journal of Political Economy 103 (6): 1176–1209.

Gulati, A., and Rao. N., (2008), “Investment, Subsidies, and Pro-poor Growth in Rural India.” Agricultural Economics 39 (2): 163–170.

Herzer,D.(2011), "Does foreign aid increase investment? Evidence from panel co-integration", Applied Economics, 11(2).

Hyder, K. (2001), “Crowding-Out Hypothesis In A Vector Error Correction Framework: A Case Study of Pakistan,” The Pakistan Development Review 40: (4) pp. 633–650.

Janjua M. Y. Y., (1997), “Business Fixed Investment: Role of Autonomous Shocks (A Stochastic simulation Approach).

Khan H. A. (1998), “Macro-economic Policies and Private Investment in Pakistan’, The Pakistan Development Review XXXVII (3): 277-291.

Matin K., and Wasow B., (1992), “Adjustmant and Public Investment in Kenya”, Washington D.C. The World Bank Working Paper No. 878.

Naqvi H. (2002), “Crowding – In Or Crowding Out? Modeling The Relationship Between Public And Private Fixed Capital Formation,” Pakistan Development Review, 41(3), pp. 255 – 76.

Naqvi S. N. H., and Sarmad (1986) “Preliminary Revised P.I.D.E. Macro-econometric Models of Pakistan Economy,” The Pakistan Development Review.

Rao. N., (2008), “Public Investment, Growth and Rural Poverty.” In Public Expenditures, Growth, and Poverty, 56–108, edited by S. Fan. Baltimore, MD: Johns Hopkins University Press

Saeed, N., K. Hyder, and A. Ali., (2006), “The Impact of Public Investment on Private Investment: A Disaggregated Analysis.” Pakistan Development Review 45 (4): 639–661.


  • There are currently no refbacks.

Creative Commons License
This work is licensed under a Creative Commons Attribution 3.0 License.