The Impact of Agricultural Output on Economic Development in Nigeria (1986-2014): An Empirical Examination


Using annual time series data from 1986 to 2014, this research empirically assessed the impact of agricultural output on economic development in Nigeria. Agricultural output (AOUT) and public agricultural expenditure explained economic progress as measured by per capita income (PCI) (PXA). Agriculture’s contributions to economic growth can be studied by looking at the sector’s functions in the economy. The Augmented Dickey-Fuller Unit Root test and the Vector Autoregressive model were used in the research. The multivariate VAR model revealed that the majority of the variables’ lags are not significant. The high level of R2 and F value in the VAR regression estimations for PCI, on the other hand, provided persuasive evidence that all the lagged variables are statistically significant, showing that agriculture plays a key role in Nigeria’s economic development. A variance decomposition study found that, aside from feedback shocks, shocks to agriculture contributed the most to economic development shocks. The impulse response function results in support of the variance decomposition analysis showed that per capita income responded positively to shocks in agricultural output over a ten-year period, whereas the response of PCI to shocks in PXA was negative for the first two years but became positive over the last eight. As a result, we came to the conclusion that agriculture is helpful and plays an important role in the Nigerian economy’s development. As a result, the government should continually raise spending in the sector and ensure that the Nigerian economy is diversified; in other words, crude oil should not be the primary source of revenue. In addition, the Nigerian government should encourage financial institutions to allocate a set percentage of their overall loan facilities to the agricultural sector in order to improve food security, job creation, and poverty reduction, among other things.

Author (s) Details

Abula Matthew
Department of Economics, Faculty of Social Sciences, Kogi State University, Nigeria.

D. Ben Mordecai
Department of Economics, Faculty of Social Sciences, Kogi State University, Nigeria.

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