ETIKONOMI
Vol 18, No 2 (2019)

The Causality Between Agriculture, Industry, and Economic Growth: Evidence from Indonesia

Abdul Bashir (Universitas Sriwijaya)
S. Suhel (Universitas Sriwijaya)
A. Azwardi (Universitas Sriwijaya)
Dirta Pratama Atiyatna (Universitas Sriwijaya)
Ichsan Hamidi (Universitas Sriwijaya)
Nazeli Adnan (Universitas Sriwijaya)



Article Info

Publish Date
22 Sep 2019

Abstract

The industry is the current engine of the Indonesian economy over the past three decades; the economic structure in Indonesia has the transformation from the agriculture sector to the industry sector. The objective of this study is to examine the causality between agricultural, industry, and economic growth in Indonesia. By using the vector error correction model (VECM), this research finds that in the long-term, there is directional causality from the industry added value, economic growth on the agricultural added value. Meanwhile, in the short-term, the variable of industry added value and economic growth has the two-way causality. Besides, the agricultural added value can only affect the industrial added value and economic growth in the short-term. These findings support the idea that the agricultural sector plays a vital role in the economy, such as increasing economic growth and growth in other sectors, especially the industrial sector in this case.JEL Classification: F40, L60, O13, O47

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Journal Info

Abbrev

etikonomi

Publisher

Subject

Economics, Econometrics & Finance

Description

Etikonomi is a peer-reviewed journal on Economics, Business and Management by Faculty of Economic and Business State Islamic University (UIN) Syarif Hidayatullah Jakarta. FOCUS This journal focused on economics, business, and management studies and present developments through the publication of ...