The Impact of Government Agricultural Expenditure on Economic Growth in Zimbabwe

Abstract

A vibrant and an efficient agricultural sector would enable a country to feed its growing population, generate employment, earn foreign exchange and provide raw materials for industries. The agricultural sector has a multiplier effect on any nation's socio-economic and industrial fabric because of the multifunctional nature of agriculture. The main objective of this study was to investigate how government expenditure on agriculture has affected economic growth in Zimbabwe from 1980-2009. The Log linear growth regression model was employed where gross domestic gross was the dependant variable and the explanatory variables are the factors which affect it which include government agricultural expenditure. The expenditures of government on agriculture were divided into three functions namely extension, credit assistance and research and development. The regression analyses were performed using Econometric-views 7 (E-views 7) statistical package. Regression was carried out on time series data for the period 1980 to 2009. The data was tested for stationarity and for autocorrelation. Problems of non stationarity of data were corrected by integrating the trending series. Results from the empirical analysis provide strong evidence indicating that agriculture is an engine of economic growth. The results from this study suggest that spending more on agricultural research and development can improve economic growth and ultimately reduce poverty. However, it can also be concluded that insufficient government agricultural expenditure on extension and credit assistance adversely affected economic growth in Zimbabwe, based on the results of the study.

Keywords: Economic growth, government expenditure on agriculture, multiplier, Zimbabwe