Growth,Employment,Exports and Wagner’s Law: Evidence from Pakistan’s Agriculture Sector (1960–2009)

Abstract

The objective of this study is to empirically examine the relationship between growth, employment, exports and their impact on gross national expenditure (as a percentage of agriculture GDP), specifically in the context of Pakistan’s agriculture sector by using the Bound Testing approach. Data sets from 1960–2009 are taken for time series analysis. The analysis demonstrates that, in the long-run, Wagner’s Law does not hold in Pakistan’s agriculture sector, as agriculture growth is negatively correlated with the share of agriculture expenditure; while, in the short-run, Wagner’s law does hold, as it supports the hypothesis. Agricultural employment tends to be a significant negative correlation with the agricultural expenditure in the long-run. However, these results disappear in the short-run. Agricultural raw material exports have a significant and positive impact on agriculture expenditures both in the short- and long-run.