Energy Consumption, Mechanization and Agriculture output in Pakistan

Abstract

Energy is one of the fundamental determinants of development of
any economy. Beside labor and capital, energy is now becoming
another crucial input for production in any sector of the economy.
On the other hand agriculture sector is the life line of a nation and
is the basic source of prosperity. Healthy agriculture sector not
only gives rise to food security but also provides strong basis to the
industrial productivity. The primary concern of this study is to
examine the affect of energy consumption and mechanization on
the agricultural productivity in Pakistan over the period 1974 –
2012. Study utilizes the decomposed energy components to show
the elaborated impact of energy consumption on agriculture output
and has developed mechanization index to relate with agricultural
output. Auto Regressive distributed Lag (ARDL) modeling
approach is employed to identify the existence of long run and
short run relationships among the variables simultaneously.
Empirical findings indicate that capital formation, employed labor
force, oil consumption and mechanization positively affect
agricultural output while gas consumption and electricity
consumption have negative impact on agricultural productivity.
Hence the study has concluded that collective energy consumption
influence the agricultural output as well as the overall growth of
the economy and thus it is suggested to adopt alternative sources
for electricity, gas generation and use of mechanization.