Effect of Agriculture Spending on Economic Growth in Nigeria: Empirical Evidence

Abstract

This paper investigates the effect of agriculture spending on economic growth in Nigeria over a period from 1977 to 2010 with particular focus on sectional expenditure analysis. The broad objective of this study is essentially to examine the effect of agriculture spending on economic growth in Nigeria. The study used ex-post facto research design and employs some econometric techniques such as Augmented Dickey Fuller (ADF) and Phillips Perron (PP) unit root tests, as well as Johansen Cointegration and followed by Error Correction Model (ECM) tests. The empirical results indicate that RGDP was particular influenced by changes in AGR, INF, INT and EXR, these variables as they stand contributes or promotes economic growth in Nigeria. Accordingly, we recommend amongst with others that government should increase spending on agriculture, since most of the poor but active people still reside in the rural areas and their main source of livelihood is agriculture which can provide food security, generate employment for the teeming youths and creates wealth for the citizens in Nigeria. And that as a policy measure, we strongly suggest the reduction of unproductive government consumption spending habit and effectively control inflation, interest and exchange rates in the economy so as to attract investment.

Keywords: Augmented Dickey Fuller, Phillips Perron, Cointegration, Error Correction Model, Entrepreneurs.