Abstract:

After the dissolution of Union of Soviet Socialist Republics, Central and Eastern Europe (CEE) and Commonwealth of Independent States (CIS) countries are started reforms in every aspect of economic life in order to transition to a privatized and open market economy. As a consequence, agricultural sector, which is constructed on the basis of centrally planned Soviet Agricultural Model, undergo a set of structural transformations and ultimately become the most important key sector especially in CEE countries. Thus, agricultural sector is closely linked with economic development. In this context, our study is aimed to investigate the causal relationship between agricultural sector and economic development for 24 transition countries for 1995 – 2015 period, applying Pesaran (2007) second generation panel unit root test and Dumitrescu – Hurlin (2012) heterogeneous panel causality testing procedure. Results indicate that there is homogeneous causality running from economic growth to agricultural development and heterogeneous causality running from agricultural development to economic growth.  

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