Long-run and short-run responses of agricultural sector growth to its determinants in Nigeria

Abstract

The study examined the long-run and short-run responses of agricultural sector growth to its determinants in Nigeria using time series data (1981 2015). Dynamic Ordinary Least Square (DOLS) method was employed in the analysis of the data. Jarque-Bera Normality Test, Breusch-Godfrey serial correlation LM test, Engle Granger 2-Step Test for Co-Integration and CUSUM of Squares Test were used to test for normality, serial correlation and structural dynamic stability of the data. The trend of agricultural sector growth revealed that sustained growth of the sector has been experienced since 2001 up till 2015. The results revealed that agricultural sector growth was positively and significantly influenced by capital expenditure in the sector, which was proxy by Total Government Agricultural Expenditure (TGAE), in the long-run; while in the short-run, the sector growth was positively and significantly influenced by labour employment. It is therefore recommended that for sustained agricultural sector growth and development in the country, increased capital expenditure in the sector should be pursued with sustained vigour. Since agriculture sector shows immediate and significant response to employment, it should be made attractive to youth employment by provision of incentive. This would ensure dual gain of tackling unemployment problem in the country and ensure agricultural sector growth.