Are Manufacturing and Agriculture Complementary? Insights from Sweden

Abstract Structural economic transformation theories have emphasized the role of agricultural development in industrialization and vice versa. The question is whether industrial development and agricultural development were complementary. Using unique data from Sweden (1800–2020), we investigate the causal link between agriculture and industry. In the presence of structural shifts and breaks, the causal direction is established using the Fourier Granger causality technique. Based on the results, Sweden supports the growth complementarity hypothesis. This indicates that sectoral convergence tendencies are encouraged by the larger expansion of industry, which frequently spreads to agriculture and vice versa.