Exploring the Link Between Output and GDP Headed Growth

Exploring the Link Between Output and GDP Headed Growth
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According to the National Income Committee, ‘‘A national income estimate measures the volume of commodities and services turned out during a given period, counted without duplication.’’ As a consequence, the entire or summation of national income measures the flow of goods and services in an economy viz. output or production which is why it is a flow, measured over the period of time, and not a stock concept, measured over the point of time. Economists attempt to measure national income in terms of its production aspect, income aspect, and expenditure aspect. That is to say that there are three methods of measuring the income of an economy (Singh, 2013). As far as Production aspect of national income is concerned, it points to the flow of goods and services in the economy or the process of value-adding which is calculated by subtracting the value of intermediate consumption from the value of output (Jain & Ohri, 2010)
Does Economic Growth promote output or production of the state or does production lead to higher growth? There is a strong relationship between agriculture production and national income of the countries. The agriculture sector is a very important one which takes account of all those economic activities where there is the direct use of natural resources such as agricultural resources, forestry, fishing, fuels, metals, minerals, and so on. It is this very sector that provides raw materials to other sectors of the economy, particularly the manufacturing sector. There is also a very strong relationship between production of high-value cash crops and national income in general and saffron production and national income in particular (Mehdi & Reza, 2012) thereby reflecting the sustainable links between them.
GDP led growth is always preferred by economies (Shombe, 2008) since it is very imperative for growth and development plans and methodologies. As a consequence, it has been heavily highlighted and acknowledged cum self-confessed in all recent empirical studies that highlight the interface between agriculture production and GDP led growth and development because it supplements growth and development in Total-Factor-Productivity (TFP) or we may perhaps well put it as the level of efficiency or the level of productivity (Y/L) which is a very precise and noteworthy theory and model in the contextual framework of economic growth of a country particularly developing countries (Qadri, 2018). It contributes to industrial growth and brings a competitive environment in the international markets. It refers to the rate at which employment is generated from the employed resources (Ahluwalia, 1991).
An improvement in productivity levels result in better utilization of resources and diminishes the cost and the prices of industrial goods and services, which in turn, leads to faster growth in demand in both national and international markets. The Productivity is used as a point of reference or yardstick to rank firms or economies. In addition, it intensifies inflows in countries, which in-turn increase technical efficiency levels and cut down inefficiencies in an economy. Production of high-value cash crops has a multiplier effect upon the income and output level of the farms in particular and the growth rates of the economy in general. Saffron is the most important high value-cash crop of India which is cultivated in Jammu and Kashmir. It is the significant horticulture crop with greater efficacy and wide market. At present, there is low production and productivity in saffron and many other high-value cash crops. All concerned authorities and stakeholders must pull up their socks and seriously work upon developing expertise and technology to improve the levels of production and productivity and reduce the cost of production and marketing.
Due to implausible and unbelievable attributes and use of high value-cash crops in general and saffron (Nehvi et al., 2007) in particular, the global production is insufficient to meet the mounting worldwide demand for the reason that most of the western countries have shunned the cultivation due to the very high cost of production and as such probabilities of their horizontal growth and development are almost negligible. On the other hand, in labour abundant countries, there is an incredible and large pool of human resource which is why we find huge prospects for high value-cash crops like saffron. Therefore, we find bounteous scope to develop and multiple returns in such crops provided they are cultivated on logical, systematic, and, scientific outlines. Moreover, we need to re-farm in the conventional and non- conventional areas. In line with a robust link of a good number of farm families with such crops directly or indirectly, efforts are to be made to protect the wellbeing of growers and improve their standard of living by making all the industries associated with high value-cash crops more profit oriented.

Conclusion:
Jammu and Kashmir should promote exports of horticulture crops in general and cash crops like saffron in particular because it will increase agricultural GDP to a great extent. If we won’t encourage production of such crops, we will witness a declining share of agriculture export in the agricultural sector and declining share of agriculture to Gross Domestic Product (GDP). There are different econometric models like Johansen co-integration techniques (Gujarati, 2004), Auto Regressive Distributed Lag Model (ARDL),Vector Auto Regression (VAR), and other forecasting models that allow us to use causal relationships as a good tool of analysis and forecasting, estimating the different types of relationship between economic variables. Through such econometric modeling, econometricians, agricultural scientists, and researchers must try to investigate the relationship of the production and Gross Domestic Product (GDP) in the context of the agrarian economy in the broad-spectrum and commercial high-value economy in a specific form.
References:
Ahluwalia, I. J. (1991). Productivity and Growth in Indian Manufacturing. Journal of Quantitative Economics., 176.
Gujarati, N. D. (2004). Basic_Econometrics (Fourth). The McGraw-Hill Companies.
Jain, R.T. & Ohri, K. V. (2010). Introductory Microeconomics and Macroeconomics. New Delhi: VK Publications, New Delhi.
Mehdi, S., & Reza, M. (2012). Saffron Export and agricultural value added in Iran. European Journal of Experimental Biology, 2(1), 24–31.
Nehvi, F. A., Wani, S. A., Dar, S. A., Makhdoomi, M. I., Allie, B. A., & Mir, Z. A. (2007). New emerging trends on production technology of saffron. Acta Horticulturae, 739, 375–381. Retrieved from http://doi.org/10.17660/ActaHortic.2007.739.49
Qadri, B. (2018). Notes on the Productivity improvemnets from education. Kashmir Reader, 8(239), 9.
Shombe, N. H. (2008). Causality Relationships between Total Exports with Agricultural and Manufacturing GDP in Tanzania. Institute of Developing Economies, IDE DISCUS, 1–34.
Singh, R. (2013). Indian Economy (Fifth). Green Park Extension, New Delhi: McGraw Hill Education (India) Private Limited.

 

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