Effect of Agricultural Sector Expenditure on Nigeria’s Economic Growth

Abstract

The study examined the Effect of Government Agricultural Expenditure on Nigeria’s Economic Growth. Time series data (1981–2015) were generated from the Central Bank of Nigeria and the National Bureau of Statistics. Descriptive Statistics and Vector Error Correction Model were used for data analysis. A unit root test was carried out to ascertain the stationarity of the series. Johansen co-integration test was also carried out to establish co-integration status of the variables in the model. For valid inference, estimated coefficients were subjected to normality, autocorrelation, heteroskedasticity and dynamic stability tests. The null hypotheses in relation to the respective tests statistic could not be rejected at 5% level of significance. The negative sign and statistical significant of Error Correction term of the VEC model, further confirmed the existence of co-integrating relationship among the variables in the model. The descriptive statistics result shows that, for almost a decade, public spending on agriculture consistently decline and was below the 10% benchmark of the Maputo declaration. The estimated VECM results showed that on the long-run, only the coefficient of Government Agricultural Expenditure variable influenced the economic growth, which was proxy by National GDP. This influence was positive and statistically significant at 5% probability level. However, on the short run, the result showed that both coefficients of Government Agricultural Expenditure variable and that of agricultural output were both positive and statistically significant in influencing the economic growth (GDP) at 5% probability level. Hence, since government expenditure has positive and significant effect on economic growth both on the short run and long run, it is recommended that government should review upward agricultural expenditure to stimulate growth in Nigerian economy, which could trigger more employment opportunity, increase per capita income, improved agricultural sector infrastructural deficit  and reduce poverty.