Effect of agriculture on economic growth in Algeria during the period 1991–2022

Abstract

Purpose. This paper aimed to study the impact of both agricultural value-added and agricultural labour on the economic growth of Algeria (represented by the real Gross Domestic Product – GDP) during the period 1991–2022, using the co-integration method according to the bounds approach known as the Autoregressive Distributed Lag modeling (ARDL). Results. The study revealed a relationship between real agricultural value-added and real GDP in both the short and long terms. However, the impact ratio in the long term is somewhat weak, reflecting the weakness of agricultural production in contributing to total output formation and economic growth. Additionally, agricultural employment only affects real GDP in the long term. The error correction coefficient is negative and significant, with the speed of adjustment towards equilibrium in the long-term reaching approximately 52.19 % (about one year and 10 months). Scientific novelty. This study highlights the great importance of the agricultural sector as one of the solutions to economic diversification in order to achieve economic development in Algeria – a country that has suffered and continues to suffer from economic dependence on the hydrocarbon industry. However, this study stands out from previous research by addressing various programs and reforms implemented in the agricultural sector during the study period. Moreover, it measures the impact of the agricultural sector on economic growth by creating a logarithmic model with two main variables: agricultural value-added and agricultural employment, both of which effectively contribute to increasing agricultural production and thus economic growth. Practical value. This study emphasises the need for the government to prioritise and improve agriculture to move towards smart agriculture and reclaim wastelands. At the same time, the government must allocate new programmes to develop the agricultural sector and activate workers to increase agricultural productivity in order to achieve food security and transform the country towards a more prosperous and sustainable future.