Agriculture’s Role in Economic Growth: An Exploratory Study Among Southern and Northern EU Countries

Abstract

The role of agriculture in economic growth is an issue that still attracts the interest of scholars and particularly now when the whole growth approach is reexamined and reevaluated. The main objective of the current paper is to identify the causal relationship that exists between agricultural value added per worker and Gross Domestic Product (GDP) per capita in the European Union. The differences and similarities in relation to the role of agriculture in economic growth are examined among Southern and Northern EU countries. Recent methods of linear co-integration and the Granger causality test are used to examine short-run and long-run relationships and the role of agricultural value added in economic growth, as well as the direction of causality. The bi-directional relationship between agricultural value added and economic growth is of crucial importance since it can facilitate successful economic policies. The results provide evidence that agriculture can lead to growth in several EU countries, play stabilizer role and be an engine of growth in this period of economic crisis.