Agricultural Production and Economic Growth in Nigeria: A VAR Approach

Abstract

Prior to the discovery of crude oil in commercial quantities in 1952, Nigeria relied almost exclusively on agriculture for its sustenance. The sector contributed more than 80 percent of total government revenue and generated over 75 percent of total employment. However, this contribution was truncated in the late 1970s as the country shifted focus in favor of oil exploration and exportation. What is the extent of agriculture’s contribution to economic growth in recent times had remained a theoretical puzzle. This study is undertaking with the objective of investigating the impact of agriculture on economic growth in Nigeria and offers a theoretical framework for understanding the co-evolution of the structural and institutional factors that contributed to several sectorial interactions among the core determinants of agricultural productivity and long-term economic growth in the country for the period 1980-2017. Adopting a vector autoregressive (VAR) model as a technique of analysis, the study found positive and significant impact of agricultural output on economic growth for the period of investigation. The study also explored the contributions of the various components of agricultural productivity and found that crop production contributes more significantly to agricultural development than the other sub sectors of the agricultural economy. The study conclude with some recommendations such as putting in place agricultural growth promotion plans that could guarantee the practice of agriculture as a business, investing in agricultural infrastructure development to encourage all-year farming to ensure food security and sustainability, subsidizing agricultural inputs to farmers as well as strengthening the linkages between agriculture and other sectors of the economy for rapid industrialization among others.

JEL CLASSIFICATION CODE: E31, O11, 047, O55, Q10

DOI: 10.7176/JESD/10-6-06

Publication date:March 31^st 2019