Causalities between Price, Pond Area and Employment in Aquaculture Production

Nik Hashim Nik Mustapha, Azlina Abd Aziz, Nik Mohd Hazrul Hashim

Department of Economics, Faculty of Management and Economics, University of Malaysia Terengganu, Kuala Terengganu, Malaysia.
Graduate School of Business, National University of Malaysia, Bandar Baru Bangi, Malaysia.

DOI: 10.4236/nr.2013.42023                

Abstract

The role of aquaculture industry is becoming more prominent in order to supplement marine capture in meeting the food need for the growing Malaysian population. In an attempt to minimize depletion of marine fisheries, only traditional vessels are allowed to fish along the coastal area while bigger vessels are relegated to deep-sea fishing. During the 9th Malaysian Plan (2006-2010) aquaculture has been recognized as the engine of growth in the national food sector’s development strategy. Future fisheries policy is expected to focus more on aquaculture production, marketing and technological improvement as an alternative to marine capture. This paper investigates the causalities between the selected freshwater fish prices, aquaculture area and production. The study aspires to establish whether or not market price is a key contributor to a rise in the aquaculture area and production. Aquaculture firms comprising the individual culturists are generally motivated by the economic potential of the industry which is reflected in excess of price over cost of production. Our hypothesis is that government policy and initiation rather than prices had give rise to greater participation of culturists and hence augmented the level of employment. However, production increase has a negative implication on environment degradation. Thus there is a conflicting view as regards to the employment opportunity generated by aquaculture undertakings and the need for sustainable development arising from this growing industry. Multivariate time series analysis was used in this investigation.

Keywords

Aquaculture; Unit Root; Cointegration; Vector Error Correction Model; Granger’s Causality

Conflicts of Interest

The authors declare no conflicts of interest.

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