Governance and Management Review, Vol 3, No 1 (2018)

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Public Spending and Agricultural Sector Output: A Path Way for growing Nigeria out of Recession

Daniel Charles, Okay Onuchuku, Steve O. Tamuno

Abstract


Agriculture has been identified in extant economic literature as a critical sector in an economy. It has a huge potential for promoting and stimulating economic growth, reduce poverty and creating employment for a large number of people especially in developing countries. Thus, the objective of this paper is to empirically examine the effect of public spending on agricultural sector output in Nigeria between 1980 and 2016. Time series data were sourced from secondary sources on Agricultural Sector Output (AGR), Government spending in Agriculture (GEA), Foreign Direct Investment inflow into Agriculture (FIA) and Deposit Money Banks’ Credit to the Agricultural Sector (BCA). The data sets were analysed based on the Auto Regressive Distributed Lag (ARDL) Bounds testing approach for co-integration that estimates the long-run and short-run relationship between variables. The result of the analysis reveals that both short- run and long-run relationship exists between government spending and agricultural sector output in Nigeria. Again, the result also revealed that government spending has a positive insignificant relationship with agricultural sector output in Nigeria within the period under review. The policy implication of this result is that theoretically, government funding can enhance the pace of agricultural development in a country but Nigeria currently does not enjoy such optimal benefit. Based on these findings, the paper recommends that government should increase her budgetary allocation and ensure fiscal discipline regarding spending in the agricultural sector so as to boost economic growth and development, a panacea for growing out of recession.

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