Intersectoral linkages and Agricultural growth in Swaziland for the period 1971-2011

Abstract

Agriculture plays an important role in the Swazi economy as it is the primary source of employment, livelihood and food security. The future success of the contribution of agriculture to economic growth depends largely on how agriculture stimulates growth of the other sectors and especially how the other sectors growth spills over and stimulates agricultural growth. Using bound test approach to cointergration, Granger causality and Impulse Response framework, the study therefore examined the interrelationships between agriculture and the rest of the sectors of the economy and their impact on economic growth over the period of 1971 to 2011 in Swaziland. The empirical results indicated that a long run relation exists among agriculture, the rest of the economy and overall economic growth. Granger causality analysis indicated that there is bidirectional causality between agriculture and economic growth, unidirectional causality between agriculture and services, running from services to agriculture and independence between agriculture and industry. The Impulse Response showed that contribution to GDP forecast error by the industry sector is the highest, followed by agriculture and service sectors. This study recommended that agriculture should be given more priority in order to grow the economy.

Keywords: Agriculture growth, ARDL, Granger causality tests, Inter-sectoral linkages, UECM, Variance decomposition.