Do agricultural dynamics always influence economic growth? A comparative analysis of developed and developing nations using select parameters activity

This study investigates the influence of agriculture on economic growth across developed and developing countries from 2001 to 2021, emphasizing agricultural productivity, technological inputs, trade openness, and human capital formation. The study utilized fixed effects panel regression analysis for the primary analysis and employed the Feasible Generalized Least Squares (FGLS) method as a robustness check. The analysis reveals that technological adoption measured through fertilizer use and mechanization consistently drives economic growth in both country groups. Similarly, Agricultural productivity, measured as gross value added (GVA) per agricultural worker, emerges as a critical growth driver in both the nations, where it bolsters rural incomes, stimulates domestic demand, and generates multiplier effects across sectors. Conversely, tertiary education enrollment ratio (GER) exhibits a negative correlation with growth in lower-income settings, suggesting structural mismatches between educational outcomes and labor market needs. Trade openness in agriculture presents a dual narrative: while developed nations benefit from liberalized trade through high-value exports and agribusiness investment, developing countries often face competitive disadvantages, import-driven market disruptions, and restrictive trade policies from advanced economies. These dynamics can exacerbate rural poverty and undermine local production capacity. Overall, the study underscores the complex, context-specific interactions between agriculture and economic growth, advocating for policy frameworks that align technological advancement, educational and trade systems with national development priorities.