Does the dog wag the tail or the tail the dog? Cointegration of Indian agriculture with nonagriculture

An oft-repeated refrain in the development literature has been the "neglect " of the agricultural sector vis-g-vis the industrial sector in the develop ment process of the less developed economies. Because infrastructure is cru cially linked to both agricultural and industrial development, poor infrast ructure development may make it appear as if slow agricultural growth has c aused slow industrial growth. Further, in estimating the relation between a griculture and industry, the former should not be assumed to be exogenous; rather, this should first be established. Moreover, given the presence of n onstationarity conventional regression techniques may yield spurious regres sions and significance tests. To circumvent these various problems, we stud y the cointegration of the different sectors of the Indian economy in a mul tivariate vector autoregression framework. (C) 2000 Society for Policy Mode ling. Published by Elsevier Science Inc.