AN ECONOMETRIC ANALYSIS OF THE RELATIONSHIPS BETWEEN ECONOMIC GROWTH AND AGRICULTURAL CREDITS FOR PROPOOR GROWTH in TURKEY

Abstract

The agricultural sector is important for Turkey for many reasons such as high rate of rural population, a large share of employment in the agricultural sector, the sector's contribution to the formation of national income, and production capacity of sector. In recent years, although the share of agriculture sector in GDP and in foreign trade has declined, the share of it in employment is still protected. The agricultural sector is the backbone of the rural economy. Although there is a common view that agriculture is an important sector for an economy, there is no consensus about preference of agricultural growth in reducing poverty as the best remedy. Some researchers advocates that primarily this sector should bear of the importance in reducing poverty because the majority of the poor live in rural areas and are employed in the agricultural sector. Another view is that non-agricultural activities provide capital accumulation and thus more rapid development. Many studies in the literature, suggest that investments in the areas like rural infrastructure, health and education with agricultural development in developing countries are pro-poor. The objective of this study is to examine whether there is a relationship between agricultural growth and economic growth in the long-term and to analyze whether there is a relationship between agricultural credits as an agricultural support and agricultural growth in the long term. In addition, it is aimed to investigate if the agricultural credits is effective on the number of people employed in agriculture. Empirical findings of the study reveals that agricultural credits has a direct effect on agricultural income and employment, on the other hand it also shows that agricultural credits has indirect effect on the agricultural income due to the impact of agricultural credits on agricultural income and the impact of agricultural income on agricultural employment.

Keywords

• Pro-poor growth, agricultural credits, agricultural growth

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