ABSTRACT
The study examines the macroeconomic determinants of agricultural sector growth in Nigeria which is based on the empirical evidence of the short-run and long-run interrelationships among capital expenditure on agriculture, inflation rate, exchange rate, interest rate and credit availability to the sector using agricultural GDP as dependent variable. Time series data from 1981 – 2015 were sourced from Central Bank Statistical Bulletin. The data were analysed based on bound test form of cointegration and Auto Regressive Distributed Lag model was used to investigate the nature of the relationship among the macroeconomic determinants affecting Agricultural sector growth in Nigeria in the short run and long run.
The result of the bound test implies that there is a cointegration (long run relationship) between agricultural sector growth, interest rate, exchange rate, inflation rate, government expenditure on agricultural sector and credit to agricultural sector from commercial banks and therefore, the null hypothesis of no cointegration between the variables is rejected and the alternative hypothesis is accepted. The ARDL shows all the variables have negative relationship with agricultural sector growth while credit available to agriculture has a positive relationship with the Agricultural sector growth in the short run. In the long run, the nominal exchange rate has a positive relationship with agricultural sector growth while other macroeconomic variables have a negative relationship with agricultural sector growth
It is therefore recommended that the Nigerian government should double its efforts in designing sector-specific agricultural policies that will facilitate improvement in the quality of the institution, long-term sustainable government expenditure in agriculture, maintenance of favourable exchange rate and commercial banks’ credit accessibility to farmers at low interest rate. These will act as incentives to farmers for increased agricultural production in Nigeria which will lead to the growth of the Agricultural sector.
TABLE OF CONTENTS
CONTENTS PAGE
Title page i
Dedication ii
Certification iii
Acknowledgement iv
Abstract v
Table of contents vi
CHAPTER ONE: GENERAL INTRODUCTION
1.1 Introduction to the study 1
1.2 Statement of the problem 2
1.3 Research Questions 4
1.4 Objectives of the study 4
1.5 Justification of the study 4
1.6 Scope and Limitations of the study 6
1.7 Organization of the study 6
CHAPTER TWO: BACKGROUND TO THE STUDY
2.0 Introduction 7
2.1 Trend Analysis of Agricultural Sector Output in Nigeria 7
2.2 Trend Analysis of Interest Rate in Nigeria 8
2.2.1 Interest Rate Policy in Nigeria 9
2.3 Trend Analysis of Exchange Rate in Nigeria 9
2.3.1 Exchange Rate Policy in Nigeria 11
2.4 Trend Analysis of Inflation rate in Nigeria 12
2.4.1 Inflation rate in Nigeria 12
2.5 Trend Analysis of Government Recurrent Expenditure on Agriculture 13
2.5.1 Government Expenditure Programmes and Policies on Agriculture 14
2.6 Trend Analysis of Credit to Agricultural Sector 16
2.6.1 Credit Guarantee Schemes in Nigeria 17
2.7 Summary of the background to the study 19
CHAPTER THREE: LITERATURE REVIEW
3.1 Introduction 21
3.2 Theoretical Review 21
3.2.1 The Solow-Swan neoclassical growth theory 21
3.2.2 Endogenous Growth Theory 22
3.2.3 Rostow’s Theory of Economic Growth 22
3.2.4 Wagner’s Law 23
3.2.5 Export growth theory 24
3.3 Methodological Review 26
3.3.1 Method Employed in the Studies 26
3.3.2 Summary of the Methodological Review 27
3.4 Empirical Review 28
3.4.1 Summary of Empirical Review 34
3.4.2 Gaps in the Literature and the Contributions of the Study 35
CHAPTER FOUR: THEORETICAL AND METHODOLOGICAL FRAMEWORK
4.0 Introduction 36
4.1 Theoretical framework 36
4.2 Model Specification 39
4.3 Methodological framework 40
4.4 Scope and Sources of Data 42
CHAPTER FIVE: DATA PRESENTATION AND ANALYSIS
5.1 Descriptive Analysis 43
5.2 Unit Root Test 44
5.3 ARDL Bounds Test for Cointegration 46
5.4 Estimated Short run and Long run relationship 47
CHAPTER SIX: SUMMARY: CONCLUSION AND RECOMMENDATION
6.1 Summary 51
6.2 Conclusion 52
6.3 Recommendations 52
REFERENCES 54
LIST OF FIGURES
Figure 1 Contribution of agricultural sector to GDP in Nigeria 8
Figure 2 Interest rate trend in Nigeria 9
Figure 3 Exchange rate trend in Nigeria 10
Figure 4 Inflation Rate trend in Nigeria 12
Figure 5 Government Recurrent Expenditure on Agriculture in Nigeria 14
Figure 6 Credit to Agricultural Sector trend from Commercial Banks 17
LIST OF TABLE
Table 5.1 Result of Descriptive test 44
Table 5.2.1 Result of Augmented Dickey Fuller Test 45
Table 5.2.2 Result of Phillips-Perron Unit Root Test 46
Table 5.3 Result of Bounds test 47
Table 5.4.1 Result of Short-run Model 49
Table 5.4.2 Result of Long-run Model 50
APPENDIX ONE
APPENDIX TWO
APPENDIX THREE
APPENDIX FOUR
APPENDIX FIVE