Determinants of Real Private Investment in Agriculture Sector of Pakistan

Author(s) : Mehak Ejaz and Kalim Hyder

Abstract:

This paper explores the determinants of real private investment of agriculture sector in Pakistan. Real development spending and real interest rates representing the economic policy environment along with price of capital and income in agriculture sector are included to determine real private investment of agriculture sector. With the consideration of endogeneity due to reverse causality, we employ 2SLS, LIML and GMM techniques. The growth in agriculture income and developmental spending have positive impact on real private investment whereas higher real interest rates and increasing prices of capital goods reduce real private investment in Pakistan.