The Contribution of Agricultural Manufacturing in the Egyptian Economic Growth: Kaldor's Hypotheses

Abstract

This research uses a Kaldor’s hypotheses to estimate the contribution of the agricultural manufacturing sector to increase the economic growth of the Egyptian agricultural sector during the period 1997-2018. It based on the three "hypotheses" of growth. Kaldor model depends on three hypotheses related to the relationship between the growth of manufacturing sector and the economic growth. The study used the growth rate, dummy variable, Ordinary Least Square (OLS) test, and used CUSUM squares test and Chow breakpoint test. In addition to, testing the stability of time series depended on E-view 11.0. The food, beverage, tobacco industries and textiles industry are the largest two sectors in the Egyptian agricultural manufacturing industries, as they represent about 83.58% of the total value of the agricultural manufacturing industries output during the period 1997-2018. The results shows that the increase of real growth rates of food, beverage, tobacco industries and textile production lead to increasing in the real growth rate of agricultural output. According to CUSUM Sq test and Chow test, the year 2003 is considered as the switch point for the study variables. Also, if the real agricultural manufacturing production growth rate increases, the real agricultural manufacturing labor productivity growth rate will increase. And if the real growth rate of agricultural manufacturing production value increases, the real growth rate of agricultural non-manufacturing labor productivity will increase. The results of the research assist decision-makers in the field of manufacturing industry and agriculture in Egypt, especially in the stages of economic development.