The Empirical Investigation of the Nexus between Agricultural and Industrial Sectors in Malaysia
Hylmee Matahir

Abstract
This paper investigates the agricultural-industrial sectors relationship in Malaysia for period from 1970 to 2009. We adopted the Johansen and Juselius (1990) cointegration procedure to examine the existence of long-run relationship and employed Granger (1969) and Toda-Yamamoto (1996) causality tests to test the causality direction between the sectors in the short and long run. From the empirical evidence reveals agricultural and industrial sector are cointegrated in the long run. In addition, the causal relationship shows that there is a one-way causality direction from industrial to agricultural sectors both in the short run and long run. Therefore, it support the notion that industrial sector might improve the agricultural sectors output.

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