Empirical Analysis of Causal Linkage between Agricultural Output and Real GDP: Evidence from Nigeria

Persistent calls for economic diversification in Nigeria underscore the need to reduce reliance on oil revenues and explore alternative sources of income. The agricultural sector emerges as a critical driver in this diversification strategy, offering opportunities for revenue generation, employment creation, and the development of value-added chains. However, Nigeria’s heavy dependence on imports renders the agricultural sector susceptible to exchange rate volatility. This study examines the impact of exchange rate regimes on agricultural output and economic growth in Nigeria through a transmission mechanism framework over the period 1970Q1 to 2023Q4. Utilizing secondary quarterly data obtained from the World Bank, this study investigates the direct and indirect effects of exchange rates on economic growth via agricultural output using Structural Vector Autoregression (SVAR), impulse response functions, and variance decomposition. Findings indicate that higher exchange rates negatively affect agricultural output. In low exchange rate regimes, increased agricultural output contributes modestly to economic growth due to limited domestic processing. Conversely, in high exchange rate regimes, agricultural output tends to reduce economic growth, primarily due to the export of unprocessed goods. The study recommends maintaining a stable and low exchange rate, investing in processing facilities, and strengthening institutional support to enhance the agricultural sector’s role in long-term economic growth.

This paper examines the long run relationship between agricultural output and economic growth in Nigeria for the period 1981 to 2014 using time series data. Results from Johansen maximum likelihood co-integration approach and Vector error correction model support evidence of long run relationship between agricultural output and economic growth in Nigeria. Granger causality test also confirms the co-integration results indicating the existence of causality between agricultural output and economic growth in Nigeria. The nature of the causality however depends on the variable used to measure Agricultural output. The paper therefore recommends that the government should further strengthen agricultural policies in the area of funding, storage facilities, and market access to enhance agricultural production. Policy Strategies that will make agriculture more profitable and attractive, less laborious with improved technology should be adopted and promoted to attract investors and the youths back to agriculture.

The study examined the impact of agricultural output on economic growth in Nigeria from 1985 to 2015. The econometrics methods of Ordinary Least Squares, Co-integration, and Granger causality test were employed as the main analytical techniques. The Co-integration results revealed that there exists a long-run relationship between the variables. The short run regression result revealed that Commercial Banks' credit to the agricultural sector and the interest rate has a significant relationship with economic growth in Nigeria during the period of study. While, agricultural output has no significant relationship with economic growth in Nigeria during the studied period. The study therefore concluded that suitable or effective agricultural output enhancement policy should be put in place by the government. There should be appropriate interest rate policies that would bring about the stability of the economy and economic growth. Without agricultural produce to keep the people alive as well as lubricating our machines with agricultural oil, there can be no growth. Everything is sustained by agriculture and without it, there shall be no true living. Also, conscious efforts should be made by the monetary authorities with the emphasis on funding agriculture in order to increase economic growth in Nigeria. This can be achieved if the government avoids mismanagement, and diversifies the economy.

The agricultural sector at large plays a significant role in augmenting economic growth, serves as a source of income to the people, provides food to the teeming population, serves as a source of raw materials to the industries and provides foreign exchange to the country, etc. The current study investigates the short-run and long-run relationship among agricultural output, Government expenditure, and Economic growth in Nigeria using annual time series data from 1985 to 2019. The Zivot-Andrew unit root test indicates that gross domestic product, agricultural output, and exchange rate are stationary at first difference while government expenditure is stationary at level. The Gregory-Hansen test with structural break has confirmed the existence of a cointegration relationship among the variables employed. The Autoregressive Distributive Lag (ARDL) model with break indicates that, in the short-run agricultural output has a negative and statistically insignificant effect on real gross domestic product Nigeria, government expenditure has a positive and statistically significant effect on real gross domestic product in Nigeria, and the exchange rate has a positive and statistically significant effect on real gross domestic product in Nigeria. The break-point coefficient has positive and statistically significant. The long-run result shows that agricultural output has a positive effect on the real gross domestic product in Nigeria, government expenditure has a positive effect on real gross domestic product in Nigeria, and the exchange rate has positive effects on the real gross domestic product in Nigeria. The break coefficient shows positive and statistically significant. The study recommends that the Nigerian government should reduce the lending rate on agriculture and provide incentives to the farmers, this will encourage farmers to borrow and consequently, agricultural output will increase and the Nigerian government should increase its expenditure on agriculture to boost the sector and achieve higher economic growth.

The study examined the effect of macro-economic variables on economic growth in Nigeria between 1990-2022. Specifically, the paper examined the effect of Exchange rate on Economic growth in Nigeria and determined the effect of interest rate on Economic growth in Nigeria. The paper employed ex-facto research design, using secondary data and adopted SVAR model. The paper found out that interest rate has a significant effect on Economic growth (RGDP) in Nigeria, and found that exchange rate has a significant effect on Economic growth (RGDP) in Nigeria. The study concluded that macroeconomic variables has a significant effect on Economic growth in Nigeria. Based on the study’s findings and conclusions above, the following recommendations were made: the government should improve on her foreign reserves as an absolute measure that will stabilize exchange rate to boost economic environment for effective investment to thrive and contribute to gross domestic product in Nigeria, and interest rate is found to have increased the potentials of Economic growth in Nigeria. It is therefore important to note that since interest rate have significantly affected the Economic growth in Nigeria, the CBN should improve on discount rate to stabilize interest rate to boost economic environment for effective investment to thrive and contribute to gross domestic product in Nigeria.

The main objective of the study was to investigate the impact of Federal Government tax revenue on economic growth in Nigeria spanning from 1986 – 2024 and variables employed were; Petroleum Profit tax Revenue (PPTR), Company Income Tax Revenue (CITR), Value Added tax revenue (VATR), Excise Duties Tax Revenue (CEDTR), and Personal Income Tax Revenue (PITR). Data were sourced from the Federal Inland Revenue Services (FIRS) publications and the Central Bank of Nigeria (CBN) Statistical Bulletins. The study adopted an ex-post factor research design and the model was specified using Vector Error Correction Model (VECM) and Public Finance Economic Theory was used as a theoretical framework. Vector Error Correction Model (VECM) as an econometric technique of data was used in the estimation of the parameter estimates. The findings of the study revealed that Petroleum Profit tax Revenue (PPTR) had a statistically and insignificant positive (1.42662) impact on economic growth (GDP) in Nigeria in the short-run but it had a statistically and significant positive impact on (GDP) in the long run. The findings of the study revealed that Personal Income Tax Revenue (PITR) had a statistically and insignificant positive (1.890096) impact on economic growth (GDP) in the short-run and it had a statistically and significant positive (2.696599) long-run in Nigeria. Based on the findings of the study, the study recommended that the government should intensify efforts in sustaining the positive and significant impact of PPTR and PITR on economic growth in Nigeria for more revenue generation. The main objective of the study was to investigate the impact of Federal Government tax revenue on economic growth in Nigeria spanning from 1986 – 2024 and variables employed were; Petroleum Profit tax Revenue (PPTR), Company Income Tax Revenue (CITR), Value Added tax revenue (VATR), Excise Duties Tax Revenue (CEDTR), and Personal Income Tax Revenue (PITR). Data were sourced from the Federal Inland Revenue Services (FIRS) publications and the Central Bank of Nigeria (CBN) Statistical Bulletins. The study adopted an ex-post factor research design and the model was specified using Vector Error Correction Model (VECM) and Public Finance Economic Theory was used as a theoretical framework. Vector Error Correction Model (VECM) as an econometric technique of data was used in the estimation of the parameter estimates. The findings of the study revealed that Petroleum Profit tax Revenue (PPTR) had a statistically and insignificant positive (1.42662) impact on economic growth (GDP) in Nigeria in the short-run but it had a statistically and significant positive impact on (GDP) in the long run. The findings of the study revealed that Personal Income Tax Revenue (PITR) had a statistically and insignificant positive (1.890096) impact on economic growth (GDP) in the short-run and it had a statistically and significant positive (2.696599) long-run in Nigeria. Based on the findings of the study, the study recommended that the government should intensify efforts in sustaining the positive and significant impact of PPTR and PITR on economic growth in Nigeria for more revenue generation.

The impact of the agricultural sector in maintaining sustainable economic growth has been a continuous major subject of controversy among scholars. Although some scholars claimed that agriculture is the bedrock for any growing economy and thus a precondition for industrialization, others failed to subscribe to this. This study examines the interaction between the agricultural sector and economic growth in Nigeria from 1981 to 2019 using data obtained from the World Bank development indicators. The unit root test indicates that the variables are all integrated after the first difference which informed the decision to adopt the Vector Error Correction Model (VECM) technique. The result of the estimation shows that Agricultural output has a significantly positive relationship with GDP in the long run. Granger causality shows a uni-directional causal relationship running from agricultural output to GDP. This study recommended that since the agriculture sector is a machine for economic growth in Nigeria, efforts to add value to the sector should be made through increased investment by both government and private sectors. Secondly, the linkages between the agriculture sector and other sectors be strengthened to increase the effect of agriculture sector growth on growth across the sectors. This can be achieved through increased productivity and the development of the agriculture value chain.

The heavy nature of public expenditure over the years is expected to trigger productivity in all sectors and induce economic growth in Nigeria. The idea of government spending both in human and material resources is to improve the nation's infrastructural facilities, improve social welfare and empowerment packages of the masses, create more jobs, as well as provide enabling environment to enhance the growth of private investment. However, in spite of various government policies to improve the economy, the Nigeria economy is still growing at a very slow pace. It is as result of all these the paper examines the impact of government sectoral expenditure on Nigeria economic growth from 1981-2023 paper main objective is to examine the impact of government sectoral expenditure on Nigeria economic growth from 1981-2023 The variables used were real gross domestic product as the dependent variable while expenditure on industrial sector output, agricultural sector output, transport sector and housing and construction sectors are the independent variables. The Ordinary Least Squares (OLS) estimation technique was used in estimating the values of the parameters. The regression result showed that industrial sector, agricultural sector, housing and construction expenditures all have positive relationship with economic growth, while transportation sector expenditure has no significant impact on economic growth in Nigeria, and that there is a uni-directional causality relationship flowing from RGDP to IND, AGR, HCE between industrial sector output and economic growth in Nigeria. Based on the findings of the study, the paper recommends among others that one of the biggest obstacles for the development of the industrial sector is the issue of electricity. Therefore, improving Nigeria's electricity generating capacity will be an important driver of industrial growth and development. Therefore; the Ministry of power should improve investments and other sources of electricity generation like solar energy and wind energy.

This paper employed Granger causality tests amid infrastructure spending, economic growth, and employment in Nigeria for the period 1960-2017 using vector autoregression (VAR) model. The result showed a strong causality between infrastructure investment and economic growth in Nigeria. Findings of the study shows a strong underlying relationship between e infrastructure investment and job creation. Economic growth seems to be the key drivers of government jobs and that the private sector jobs drives growth, however, public jobs have not been able to translates into additional jobs in the economy. The bounds test results specify the presence of long-run equilibrium relationship between infrastructure investment, economic growth, job creation and output thereby providing a theoretical underpinning for the empirical results.

This work investigated the impact of labour force participation on economic growth in Nigeria for the period 1990 to 2021 using annual time series data on real gross domestic product (RGDP), male labour force participation rate (MLFPR) and female labour force participation rate (FLFPR). The objectives are to examine the impact of male labour force participation rate (MLFPR) and female labour force participation rate (FLFPR) on economic growth in Nigeria and to ascertain the causality relationship between male labour force participation rate, female labour force participation rate, and economic growth in Nigeria using ARDL Bounds Testing methodology. The result indicated that male labour force participation rate (MLFPR) and female labour force participation rate (FLFPR) had statistically significant impact on economic growth in Nigeria in the short run. The result also revealed that, in the long run, male labour force participation rate (MLFPR) and female labour force participation rate (FLFPR) had statistically insignificant impact on economic growth in Nigeria. A uni-directional causality relationship is found between male labour force participation rate (MLFPR) and economic growth (RGDP) in Nigeria over the period covered with the causality running from economic growth to male labour force participation rate. The result further indicated that there is no significant causality relationship between female labour force participation rate (FLFPR) and economic growth in Nigeria over the period covered. The study therefore recommended that government should design active policy for male and female participation in labour force and seriously empower women to participate in labour force in Nigeria.

This study investigates the nexus between agricultural output and economic growth in Nigeria from 1990 to 2023 using the Autoregressive Distributed Lag (ARDL) approach. Secondary time series data were sourced from the Central Bank of Nigeria Statistical Bulletin and the World Development Indicators. The analysis employed the Augmented Dickey-Fuller unit root test, ARDL bounds testing for co-integration, Error Correction Mechanism (ECM), and Granger causality tests. The long-run results reveal that real Gross Domestic Product (RGDP) has a positive and statistically significant impact on agricultural output, with a 1% increase in RGDP leading to a 24.83% rise in agricultural output. Conversely, exchange rate, trade, and inflation rate exhibit negative relationships with agricultural output, with exchange rate and trade being significant at 5%. Specifically, a 1% increase in the exchange rate and trade results in a 10.68% and 1.67% decrease in agricultural output, respectively. The short-run results are consistent, with RGDP showing a 21.18% positive effect and exchange rate and trade showing 9.13% and 1.43% negative effects, respectively. The ECM coefficient of -0.853 indicates a high speed of adjustment (85.3%) towards long-run equilibrium annually. Granger causality tests confirm a unidirectional causality from agricultural output to economic growth, emphasizing agriculture’s critical role in driving the Nigerian economy. The study recommends that the Central Bank of Nigeria adopt a managed exchange rate regime and inflation-targeting framework to stabilize macroeconomic conditions for agricultural growth. Additionally, the government should invest in agro-processing zones and rural infrastructure, and allocate at least 10% of the national budget to agriculture as per the Maputo Declaration to enhance productivity and ensure sustainable economic development.

The contribution of different agricultural subsectors to economic growth in Nigeria is investigated and further suggests policy implications for investing in each of these subsectors. To this end, Johansen cointegration test and Gregory–Hansen test for cointegration with regime shift, vector error correction model (VECM), dynamic ordinary least squares (DOLS), fully modified ordinary least squares (FMOLS), Granger causality, and frequency domain causality test are employed for data from 1981 to 2016. This paper further highlights the long and causal dynamics between the selected agricultural subsector, namely forestry, crop production, fishery and livestock, and economic growth. Findings from time and frequency domain causality tests indicate a one‐way causality running from various subsectors of agriculture to economic growth in Nigeria, meaning how various subsectors of agriculture are important for predicting economic growth. In addition, there is 54% speed of adjustment from the error correction model, suggesting a need for diversification of the economy into the agricultural sector as a means for sustainable economic growth in the face of the continuous plunge in the global oil price. In the long‐run, the effect of forestry, crop production, and fishery on economic growth is statistically significant and positive. These outcomes have inherent policy implication(s), which are elucidated in the concluding section.

Considering the enormous impact of poor standard of educational system in Nigeria over the years, the study investigated the effects of public education funding on economic growth in Nigeria from 1985 to 2019. The paper used secondary data sourced from both Central Bank of Nigeria Statistical Bulletin and World Bank’s Development Indicators 2019. The paper employed Auto-Regressive Distributed Lag co-integration, Error correction mechanism and granger-causality tests as technique for data analysis. The ARDL bound test co-integration results revealed that RRETE, RCETE and Inflation have positive relationship with Economic growth. However, RETE, SEDU and PRI have indirect influence on Economic growth in Nigeria. Statistically, only RRETE has a long run causal effect on economic growth. ARDL Error Correction Regression output showed that RETE and RCETE are significant at 10% level while PRI is significant at 5% level this indicates the existence of short run causal relationship with the establishment of ECM long run equilibrium adjustment speed. The causal results revealed unidirectional inference between SEDU and RETE, PRI and RETE, PRI and RRETE with no feedback effect. Therefore, the study recommended educational funding targeted at secondary and primary education system in order to acquire productive skills and knowledge to stimulate economic growth and development in Nigeria. There is need to meet the UNESCO funding ratio for both recurrent and capital expenditure on education sector.

This paper examines the impact of oil price shocks on Nigerian economic growth while controlling the effects of unrest in the international oil market, exchange rate and agriculture output using quarterly time series data from 1970:q1-20011:q4.The broad objective of the study is to evaluate the long run relationship among the variables namely; oil price, exchange rate, agriculture output, unrest and economic growth. The research applied ADF unit root tests to ascertain the stationary of the series and also employed Johansen and Juselius (1990) trace and maximal eigenvalue tests to ensure long-run relationship among the variables under the study. In addition, structural Vector Autoregression (SVAR) is also applied in examining the link between the shocks emanating from oil price, unrest and their impacts on economic growth. The finding from ADF revealed that all the series at level are not stationary but stationary at first difference with constant. Moreover, the findings from SVAR using the Impulse response functions (IRFs) and variance decompositions (VDCs) indicated that the response of oil price shocks and unrest to (rGDP) economic growth depicts both positive and negative impact, i.e. long-run impact on economic growth exists. The study concludes that oil price, exchange rate, agriculture output and unrest contained some useful information in predicting the future path of economic growth in Nigeria. It, therefore, recommends that government should diversified the economy from oil to non oil sectors base and to improving the security situation in the Niger Delta with a view to boosting oil output, hence leading to increased revenue and by implication growth of the economy. Key words: GDP, Exchange rate, agriculture output, oil prices, unrest, VAR, SVAR.

This paper examines the impact of foreign aid on economic growth and poverty reduction in Nigeria, using the Autoregressive Distributed Lag (ARDL) technique for regression analysis. The study employs time series data from 1986 to 2020 to analyze the long-run and short-run relationship between foreign aid, economic growth in Nigeria. The study adopted the combined theories of economic growth of the Harrod-Domar Model, the Two-Gap Model and the Three- Gap Model in theoretical outlook. The data set is used to test the long-term relationship as well as the short-term relationship. The results show that foreign aid has a positive and significant impact on economic growth and poverty reduction in Nigeria in both the long-run and short run. The study concludes that foreign aid can be an effective tool for promoting economic growth and poverty reduction in Nigeria. The study recommended that in targeting aid towards infrastructure development, foreign aid can be used to fund infrastructure projects like building and upgrading roads, ports, and power plants to create jobs and increase economic activity. It also recommended investing in education and healthcare, foreign aid can be used to support education and healthcare initiatives, to improve the overall health and well-being of the population and increase productivity Economic-growth, Foreign aid, Poverty, Nigeria, Population, Three-Gap Model Two-Gap Model