Government Policy, Agricultural Output and National Saving in Nigeria

Abstract

The study examined the role government policy and agricultural output play in national saving in Nigeria, time series data on national savings, agricultural GDP, government policy–related variables as well as other relevant socio-demographic variables were sourced for the period of 1981 – 2012 and analyzed. The Augmented Dickey-Fuller (ADF) test for stationarity, the trace and maximum Eigen statistics for cointegrating vectors as well as the cointegration regression were used at various stages for the analysis.

It was found that government’s recurrent expenditure, money supply and population all positively affect national saving. On the other hand, debt servicing by the government, unemployment rate and importation of goods all showed negative relationships with national saving.

It was thus recommended that government recurrent expenditure which empowers the populace economically should be given priority during national budget implementation, that unnecessary contraction of money supply should be avoided within reasonable inflation limits, that unrestrained borrowing as well as corruption, which prevents funds borrowed by the government from achieving their objectives thus making servicing of loans burdensome to the economy, be checked. Furthermore, it was recommended that local production of goods and services be supported to prevent excessive importation and the attendant devaluation of the Naira. Finally, it was recommended that employment generation through government expenditure which stimulates local production by the empowerment of the youth and the promotion of infant industries must be prioritized so that the Country’s teeming population can be converted into a work force that will be a driver of economic growth.

Key words: government policy, agricultural output, national saving, time series