International Journal of Advanced and Applied Sciences, 5(2) 2018, Pages: 25-32 Contents lists available at Science-Gate International Journal of Advanced and Applied Sciences Journal homepage: http://www.science-gate.com/IJAAS.html 25 An empirical analysis of agricultural export on economic growth: A case study of Pakistan Dilshad Ahmad *, Jamil Ahmad Department of Management Sciences, COMSATS Institute of Information Technology, Vehari, Pakistan ARTICLE INFO ABSTRACT Article history: Received 7 September 2017 Received in revised form 5 December 2017 Accepted 8 December 2017 This study has focused to analyze the influence of agricultural and non- agricultural export on economic growth in Pakistan obtaining annual time series data from 1972 to 2014. Gross domestic product, labor force, capital formation, agriculture exports, non-agriculture exports, exchange rate and consumer price index are prominent variables of the study. Johansen cointegration, Error Correction Model (ECM) and Granger Causality econometric approaches have employed for empirical analysis of the study. Labor force and exchange rate stationary at 1 st difference while all other variables are stationary at level. According to empirical estimates, long run equilibrium exists among agriculture exports and non-agriculture exports. Error correction model estimates have justified the existence of short run equilibrium among variables of the study. Agriculture must have significant importance, increasing productivity through priority policy measures of adequate provision of inputs, infusion of innovative mechanization and minimization of market imperfection. Potential productivity in agriculture more desirable goal and agro-based industries must familiarized in agriculture to export value added goods rather than raw material to increasing foreign exchange earning of country. Keywords: Gross domestic product Agriculture exports Non agriculture exports Exchange rate © 2017 The Authors. Published by IASE. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/). 1. Introduction *Classical and modern economist’s theories have significant role in policy measures of international trade, exports and imports. Gain from trade through specialization of production was a masterpiece work of Classical school of thought in economic growth and development. International trade have significant role in economic growth Marshall (1890). Applicability of export led growth hypothesis has justified with bounty of empirical work of trade literature. In short run analysis Keynesian theory has focused the dominant role of foreign exchange multiplier in increasing export growth with further multiple increases in income growth. In secondary procedure of multiplier, exports increases foreign exchange, which significantly sponsors importing as infusion of mechanization, capital goods and manufactured goods as indirectly boost up economic growth in the economy. In third stage, significant developments have injected in the economy with infusion of up-to-the-minute mechanization, * Corresponding Author. Email Address: dilshad@ciitvehari.edu.pk (D. Ahmad) https://doi.org/10.21833/ijaas.2018.02.005 2313-626X/© 2017 The Authors. Published by IASE. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/) expanded capacity of optimal utilization of resources with economies of scale, boosting up competition, such uprights indirectly way out of export promotion growth. In last stage, more exports have optimistic impact on economic growth; considerably promote positive externalities, improved expertise in production, and sophisticated technical expertise from rival in competition and significant managerial competencies for accuracy in production practices Faridi (2012). Generally, most of developing economies have contingent with agriculture sector, which is currently playing significant role in provision of nutritional wants and employment of major population. In Pakistan, agriculture historically contributing major role in economic growth and now it is sharing the second largest sector of country subsequent to manufacturing. Agriculture sector is contributing 42.3 percent in employing labor force and 19.5 percent in gross domestic product of the country. Agriculture sector is considering main source of nourishment basket, engagement of population and coactive partner to industrial sector with adequate supply of raw material in developing countries. Pakistan is sited as 40 th largest economy with gross domestic product of 271 billion US dollars and 26 th largest economy accordingly to purchasing power