Econometric Relationship between the Agriculture Sector Performance and Economic Growth in Nigeria

Abstract

The impact of the agricultural sector in maintaining sustainable economic growth has been a continuous major subject of controversy among scholars. Although some scholars claimed that agriculture is the bedrock for any growing economy and thus a precondition for industrialization, others failed to subscribe to this. This study examines the interaction between the agricultural sector and economic growth in Nigeria from 1981 to 2019 using data obtained from the World Bank development indicators. The unit root test indicates that the variables are all integrated after the first difference which informed the decision to adopt the Vector Error Correction Model (VECM) technique. The result of the estimation shows that Agricultural output has a significantly positive relationship with GDP in the long run. Granger causality shows a uni-directional causal relationship running from agricultural output to GDP. This study recommended that since the agriculture sector is a machine for economic growth in Nigeria, efforts to add value to the sector should be made through increased investment by both government and private sectors. Secondly, the linkages between the agriculture sector and other sectors be strengthened to increase the effect of agriculture sector growth on growth across the sectors. This can be achieved through increased productivity and the development of the agriculture value chain.