Do the vegetable exports lead to economic growth? An empirical evidence in selected SAARC economies

• Published date: 01 May 2022
• Author: Kondal Kappa
• Date: 01 May 2022
• DOI: http://doi.org/10.1002/pa.2484

ACADEMIC PAPER

Do the vegetable exports lead to economic growth? An

empirical evidence in selected SAARC economies

Kondal Kappa

Department of Economics, Osmania

University, Hyderabad, India

Correspondence

Kondal Kappa, Department of Economics,

Osmania University, Hyderabad, Telangana,

India.

Email: kondal1988@gmail.com

The present study examines whether the vegetable exports lead to economic

growth or not; and analyze the relation ship between the vegetables exports and

vegetables imports, capital and economic gro wth in selected SAARC economies for

a period of 1988–2018. Present study emplo yed panel econometric techniques;

such as LLC, IPS, Johansen-Fisher Coinetegrati on, Fully Modified Ordinary Least

Square, heterogeneous causality to draw the empiri cal inferences. The present study

confirmed that vegetables exports do no t lead the economic growth in selected

SAARC economies and rejected the Expor t led growth hypothesis. However, there

is a long run relationship exists between the vegeta bles exports, vegetables imports,

capital and economic growth in selected SA ARC economies. The study suggested

that policy makers to reframe the trade policie s with respect to vegetables exports,

and especially reduce the trade restriction for the S AARC nations. These policy sug-

gestions not only helpful to improve the ex ports growth in the long run but also

improve basic infrastructure facili ties through diversifying their capital/investment.

JEL CLASSIFICATION

C33; F43; O16; Q17

1|INTRODUCTION

Horticulture sector plays a significant role and emerged as one of the

potential of agricultural enterprise in accelerating the growth of econ-

omy. It provides nutritional security and employment opportunities,

and ample scope for sustaining large number of agro-based industries

which can generate massive employment opportunities to people

(Planning Commission Report, 2001. Govt. of India [GOI]). It com-

prises of fruits, vegetables, spices, flowers, root and tuber crops,

medicinal and aromatic plants and condiments. Among these crops,

fruits and vegetables play a pivotal role in horticulture production and

exports in the world. The classical economists (Adam Smith and David

Ricardo) stated that the role of trade is inevitable to achieve the eco-

nomic growth through specialization of the commodity. Its contribu-

tion (in terms of exports) is often substantial in the developing nations

(Kaur & Sidhu, 2014, Shah, Muhammad, & Muhammad, 2015). Thus,

In the Keynesian argument, the export growth leads to income growth

via foreign exchange multiplier in the short run. It can be obtain

through exports of different commodities (Shah et al., 2015). The

most of the developing countries are extending their exports by diver-

sifying their national trade portfolio to maintain the export stability in

the long run for economic growth. The exports are having ability to

minimize the impact of market explosive nature in the world because

all the countries become exporter to the world (Bakari, 2018; Bakari &

Mabrouki, 2017). In the recent literature, exports played an important

role in economic growth and development of a country by utilizing all

the resources and also suggested that countries have to be tent to

diversify their production and exports as their economy growth and

development take place (Guntukula, 2018; Bakari, 2017,2018; Shah

et al., 2015). Economic growth is a primary objective of the any econ-

omy in the world (Shah et al., 2015). It depends upon the several key

variables such as exports, imports, natural resources, exchange rate,

production and population of the nation and so forth. In the world,

there is an immense demand for vegetables. Therefore, this sector has

started attracting different type of entrepreneurs for enchanting the

vegetable is an engine of economic growth and greater scope for the

Received: 14 May 2020 Revised: 17 August 2020 Accepted: 8 September 2020

DOI: 10.1002/pa.2484

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https://doi.org/10.1002/pa.2484