Determining the Causal Relationship Between Exports of Agricultural Products and Agricultural Growth in Selected Countries

The foreign trade and it's relation with the economic growth is considered to be one of the most debatable issue specifically in choosing the development strategies in the developing countries. However, with respect to the research framework of this paper, an attempt is made to apply the research methodology of Hsiao- Granger Causality test to identify the relation between exports of agricultural products and agricultural growth in selected countries per se. Nonetheless the previous studies showed different and conflicting results about the cause and effect relationship between the growth of agricultural exports and economic growth, viz-a-viz estimating the bilateral causal relation, unilateral causal relation, vice versa and non existence of any causal relation between the two variables, in to to.In this paper, we performed the causality test between the growth of exports, and the value added growth of agricultural sector for 12 countries, for the period of 1970-2012. In this context first we applied the VAR Techique for some countries which their respective variables were stationary I (o), and subsequently in those which bore two cointegrated variables with unit root of degree I (1), we used the Johanson- Jelisius method. Finally we utilized the Auto Regressive Distributed Lags model (ADRL) for certain countries, which had different degree of cointegration.Thus, the finding of this paper prima facie indicate that Germany and Egypt have the unilateral causality relation from the exports of the agricultural sector to the value added growth of agricultural sector. However, for Iran, Algeria, Sweden, Canada, England and Jordan, no causal relationship has been observed between the two variables, while France and Mexico enjoyed the bilateral causal relations, but in Italy, this bilateral relation is from growth of value added of agricultural sector to exports of this sector, sine qua non.