The Causal Linkage between Agriculture, Industry, and Service Sectors in Sub-Saharan Africa: Application of Panel CS-ARDL

Abstract

This study examines the relationships among agriculture, service, and industry sectors in Sub-Saharan Africa (SSA) using panel data from 49 countries, drawn from the UNECA database for the period 1980–2023. The CS-ARDL model was employed to assess both short- and long-run linkages. The findings revealed that all sectors experience significant short-run shocks, with negative effects from contemporaneous and early lagged values. In contrast, the significant error correction terms indicate a strong adjustment toward the long-run equilibrium. Agriculture benefits positively and significantly from services and industry in the long run, whereas the long-run effects on these sectors are largely insignificant. Lagged effects reveal delayed intersectoral spillovers, highlighting the potential for sectoral complementarities. At the same time, weak long-run integration underscores the need for policies to strengthen intersectoral linkages and support sustainable structural transformation. The study recommends that policies should focus on strengthening linkages between agriculture, services, and industry, while promoting sectoral diversification and agricultural productivity through technology, infrastructure, and human capital development. Furthermore, short-run shock mitigation measures such as safety nets and market stabilisation are essential to maintain stability and support sustainable long-term growth.