Inter-Sectorial Linkage of Economic Sectors and Their Contribution to Economic Growth: A Time Series Evidence from Ethiopia and China

Abrham Tezera Gessesse, Zheng Xungang and He Ge
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Abrham Tezera Gessesse: PhD Candidate, Collage of Management, Sichuan Agricultural University, Chengdu, CHINA
Zheng Xungang: Collage of Economics, Sichuan Agricultural University, Chengdu, CHINA
He Ge: Collage of Economics, Sichuan Agricultural University, Chengdu, CHINA

American Journal of Trade and Policy, 2018, vol. 5, issue 1, 25-32

Abstract: This paper investigates the inter-sectorial linkage of economic sectors and their contribution to economic growth using time series data from 1978-2014 and 1992-2014. This study employed a Johansen cointegration test and Ordinary Least Square (OLS) model. The Johansen cointegration and multiple regression results indicate that all economic sectors have strong, positive, and significant long-run and short-run relationship with economic growth during the study period in both countries. The result revealed that the MNF giant is an engine for Chinese economic growth, while agriculture took the lion's share of the Ethiopian economy. The MNF has a bi-directional Granger cause with economic development, agriculture, and SRV for China, while GDP and AGR are Ethiopia's only bi-directional Granger cause variables. Therefore, from a policy perspective, Ethiopian policymakers need to formulate agro-processing industries to ensure the transformation of the AGR to the MNF, maintain inter-sectorial linkage, and sustain the country’s economic growth.

Keywords: Economic sectors; Economic growth; Granger cause; Ethiopia; China (search for similar items in EconPapers)
JEL-codes: F43 (search for similar items in EconPapers)
Date: 2018
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