Motivating Factors of Private Investment in Agriculture Sector of Pakistan

This research study is more helpful and advantageous for less developed and developing counties, whose dominancy more on the agriculture sector. This study has an endeavor to explore the motivated factors of private investment in agriculture sector of Pakistan empirically using time series data for the period of 1980-2014. The Augmented Dicky-Fuller (ADF) unit root test was applied to check the stationarity of variables. The Johansen Co-integration and Vector Error Correction Model (VECM) were used as analytical techniques. The co-integration regression shows the co-integrated factors and long run relation between the private investment and explanatory variables included in the study. The results obtained from the analysis of the Vector Error Correction Model (VECM) indicates that Value-Added in Agriculture Crop Sector (Vagc), Value-Added in Agriculture Sector (Vagri), Credit Available to Agriculture Sector (CAagri), Capital Stock in Agriculture Sector (Kstock), Population Growth Rate (Popg) and Remittances (Rm ) have significant and positive while Index of Price of Capital (Ipk) and Weighted Rate of Interest (rw ) have significant and negative impact on the Private Investment in Agriculture Sector (Pagri ) of Pakistan. The study suggested that government should enhance credit availability and easy method of being paid to farmer for bringing momentum in private investment. Modern technical and access of agricultural products to domestic as well as foreign market will encourage private investment in agriculture sector.