Agriculture-Industry Inter-dependence in Bhutan

Relationship between agricultural sector and industrial sector is a debatable issue and varies between the countries. This paper is an attempt to investigate the linkage between agriculture and industry in case of Bhutan, a small and landlocked country of South Asia. Statistical technique has been applied to determine the relationship between the two sectors. A simultaneous equation model has been estimated with the data for agricultural and industrial output after formal tests of simultaneity. The test results show that agricultural sector and industrial sector are interlinked in terms of output. Implication of the interrelation is that this linkage promotes overall economic growth of Bhutan.