Agriculture in Portugal: linkages with industry and services

We investigate the links between agriculture and non-agricultural sectors in Portugal by assessing the existence of long-run relationships and causality among the three main sectors of activity in terms of value added and labour productivity using a VAR model for the period 1970-2006. Agricultural value added is found to be both weakly and strongly exogenous so it exerted no influence in the other sectors expansion nor was it influenced by their growth. The results with labour productivity show that productivity gains in services and industry feedback into productivity growth in agriculture, although the link is weaker in the industry case. Portuguese decision makers believe that restoring agricultural production plays an important role in overcoming the country’s current difficulties. However, they need to pay more attention to the potential synergies between agricultural and non-agricultural sectors, and provide agriculture with the necessary technological and organizational capabilities to benefit from industry and services expansion. Our results indicate that this does not seem to have happened in the past, a situation that should be improved in order to restore agricultural production and promote overall growth.


Issue Date:
2014
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/241982
Published in:
Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement (RAEStud), Volume 95, Issue 4
Page range:
437-471

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