Sustainable knowledge investment increases employment and GDP in the spanish agricultural sector more than other investments

Abstract

Investment in every type of asset increases GDP and net employment diffierently. This paper compares the effiect produced by a permanent unitary shock in Sustainable Knowledge for the Primary Sector (SKPS) on the Spanish employment and GDP growth with the effiect produced by the other fourteen capital stock types. The methodology used is a Vector Error Correction Model (VECM), where the complementary capital can affiect SKPS instantaneously. The results suggest that SKPS produces the second-highest, short and long-term effiects on both labor and production, per Euro invested; moreover, the investment of 4.3 thousand euros is retrieved in the first year and increases net employment in one person after four years. Accordingly, the 5 million Euro Budget to invest in sustainable machinery and processing techniques increases net employment by 827 employees.