Determinants of Agricultural Output in Pakistan: A Johansen Co-integration Approach

It is an understood fact that the improved inputs and modern machinery are important determinants of agricultural output, yet it is important to quantify the relationship. The study is aimed to analyze and identify the key the determinants of agricultural output. Variables used in the study are agricultural output, fertilizer consumption, improved seeds, labor employed in the sector, number of tractors, number of tube-wells and water availability. Data for these variables is time series for 1972 to 2012 which have been obtained from Agriculture Statistics of Pakistan Yearly Book and Pakistan Economic Survey Various Issues. Johansen co-integration approach has been used to compute the results. Results show that number of tractors in the sector is an important determinant of agricultural output. Study also concludes that improved seeds, water availability, number of tube-wells and labor employed in the agriculture sector are positively related to agricultural output.