Agricultural Production and Economic Growth in Nigeria: A Var Approach

Simon M Ojonye ,A.a Omotola ,S A Philips ,K Nuga ,O Esho

doi:10.7176/jesd/10-6-06

Abstract

Prior to the discovery of crude oil in commercial quantities in 1952, Nigeria relied almost exclusively on agriculture for its sustenance. The sector contributed more than 80 percent of total government revenue and generated over 75 percent of total employment. However, this contribution was truncated in the late 1970s as the country shifted focus in favor of oil exploration and exportation. What is the extent of agriculture’s contribution to economic growth in recent times had remained a theoretical puzzle. This study is undertaking with the objective of investigating the impact of agriculture on economic growth in Nigeria and offers a theoretical framework for understanding the co-evolution of the structural and institutional factors that contributed to several sectorial interactions among the core determinants of agricultural productivity and long-term economic growth in the country for the period 1980-2017. Adopting a vector autoregressive (VAR) model as a technique of analysis, the study found positive and significant impact of agricultural output on economic growth for the period of investigation. The study also explored the contributions of the various components of agricultural productivity and found that crop production contributes more significantly to agricultural development than the other sub sectors of the agricultural economy. The study conclude with some recommendations such as putting in place agricultural growth promotion plans that could guarantee the practice of agriculture as a business, investing in agricultural infrastructure development to encourage all-year farming to ensure food security and sustainability, subsidizing agricultural inputs to farmers as well as strengthening the linkages between agriculture and other sectors of the economy for rapid industrialization among others. JEL CLASSIFICATION CODE: E31, O11, 047, O55, Q10 DOI : 10.7176/JESD/10-6-06 Publication date :March 31 st 2019

Highlights

The clamour for increasing agricultural productivity to cater for the rising world population alongside the provision of raw materials for industrial inputs has been a long-standing one
This study has successfully established the contributions of agricultural sector to economic growth in Nigeria for the period 1981 and 2017
The study was able to establish the fact that economic growth in Nigeria has largely been accounted for by the resilient agricultural growth associated with the performance of the other sectors such as industry, services and trade

Summary

Introduction

The clamour for increasing agricultural productivity to cater for the rising world population alongside the provision of raw materials for industrial inputs has been a long-standing one. It allows one to break down growth into components that can be attributed to the observable factors and to a residual factor-often called the Solow residual-which is a portion of growth that is left unexplained by increases in the standard factors of production It is a social accounting or input-output matrix which helps in the calculation of the impact multipliers from a model based on economic theory. The first term gives the contribution of www.iiste.org capital to the growth of output; the second term gives the contribution of labour to growth of output, and the third term gives the contribution of the total factor productivity to the growth of output These terms are essential in understanding the sources of economic growth in an economy. On a priori, 0, 1, 2, 3, 4, and 5 > 0 for equation (5) All the data were sourced from Statistical Bulletin www.iiste.org of the Central Bank of Nigeria (2017) and the Annual Abstract of Statistics from the National Bureau of Statistics (various issues)

Estimation

Per cent

Results of Linear Regression

Conclusion and Recommendations