Impact of government expenditure on agriculture in Nigeria: A subsector analysis

Abstract

This paper examines the effect of government expenditure on agricultural sector in Nigeria using the Johansen cointegration and Vector error correction model approaches. Specifically, the paper examines the relationships between government expenditure on agriculture subsector outputs for crop, livestock, fishing and forestry over the period 1980 to 2019. The results of the short run and long run analyses indicate the significant influence of government expenditure in agriculture on agricultural outputs except in forestry subsector. The granger causality test result indicates the absence of causality relationship between agricultural expenditure and agriculture outputs except in crop and livestock subsectors. However, there is a strong unidirectional causality from agricultural credit to both aggregated and disaggregated agricultural outputs. The paper recommends the need to increase government expenditure on agriculture in order to boost productivity. Government should also assist farmers to access credit facilities which can help increase production in the agricultural sector.