Abstract:
The role of agriculture has been significantly emphasized in improving the living standard of the
population and economic framework of any country. Rostow (1960) in his Stages of Economic
Growth explained that agriculture is crucial for the “take-off stage” of a nation’s economic growth
and development. Agriculture has been an important sector in Sri Lanka which contributes 7.4%
to the GDP, 25.5% of the total labor force, and 20.62% to the foreign earnings and Livelihood
Avenue for 2.1 million households in Sri Lanka. The contribution of agriculture sector
determinants food, forestry, fishery and livestock: to the GDP shows a declining trend during the
last four decades. Therefore, this study attempts to examine the effect of these determinants on
economic growth over the period of 1987-2019. Secondary data was extracted from the Central
Bank of Sri Lanka. This study adopted econometric modeling to confirm the stationary, long run
relationship, and short run relationship among the variables. The Augmented Dickey-Fuller and
Phillips-Perron unit root tests were confirmed that all the variables are stationary only at I (0)
and I (1) and ARDL (3,4,4,3,4) model. The Wald test found a co-integrating relationship between
the variables under considered in this study. The findings of Auto Regressive Distributed Lag
(ARDL) bound test shows that the food production, forestry have negative relationship, fishery
and livestock have positive relationship with GDP in the long run. Even though all the explanatory
variables have relationship with GDP, only livestock has statistically significant impact on RGDP
at 5% significant level in the long run in Sri Lanka. The Error Correction version of the ARDL test
discovered that food production, forestry, and livestock have a positive and significant short-run
impact on RGDP. While economic growth can return to a long-run steady state at a rate of 35.75
% in each year following external shocks. As a result of this research, the Sri Lankan government
should prioritize concentrating on several subsector variables in order to accelerate the country's
economic growth. Hence, Sri Lanka needs efforts on agricultural; based structural transformation
by adopting new technology to increase labour and land productivity, improving farm-market
linkages, investing in value chains, and also generating off-farm employment to absorb excess
labour in the rural areas. In addition, Sri Lanka needs to redouble her efforts to build sustainable
agriculture food systems that are better able to withstand crises and shocks in the future.
