Analysis of Agricultural Policy and its Effectiveness in Economic Growth: An Empirical Investigation in the Ethiopian Case

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Date

2007-03

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A.A.U

Abstract

This study has tried to identify the sources and determinants of agricultural product at aggregate level. Agricultural product is examined as a result of labor, land, change in policy environment and weather condition (rainfall). The common finding in the agricultural policy analysis is that agricultural policies fail to achieve their main objectives of farm income support efficiently at national and regional level. The sect oral analysis of the study shows that agriculture had a highest fluctuation throughout the sample period in comparison to other sectors. Nevertheless the production (yield) of major crops has been grown and government attention in terms allocating government expenditure on agriculture has been also increased in recent government than the p revious. The time series result of the study shows that labor and land in the short run as well as in the long run are found to affect agricultural product positively and statistically significant. In the short run government expenditure also affects the sector significantly and positively. The contribution of growth of agriculture to national well-being, on the other hand, is found to be less than that of the non-agricultural sector in the long run. The statistical analysis also shows that the agricultural sector which still provides the livelihood for most of the population made increasing growth rate but with a declining contribution to the overall economic growth as compare to other sector. Rapid population growth and low productivity of land and labor are the main challenges which need great policy attention to improve the work ethic as well as technological expansion to transform and play the sector's significant role on the overall economic growth.

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Keywords

Ethiopian Case, Empirical Investigation

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