Agricultural productivity and macro-economic variable fluctuation in Nigeria

Type Journal Article - International Journal of Economics and Finance
Title Agricultural productivity and macro-economic variable fluctuation in Nigeria
Volume 4
Issue 8
Publication (Day/Month/Year) 2012
Page numbers 114-125
The study established the empirical relationship between value of agricultural GDP as the ratio of total GDP
(proxy as agricultural productivity) and some key macroeconomic variables in Nigeria. Augmented
Dickey-Fuller unit root test and improved ADF-GLS unit root test conducted on the specified time series showed
that all series were integrated of order one. The short-run and long-run elasticity of the agricultural productivity
with respect to some key macro-economic variables were determined using the techniques of co-integration and
error correction models. The empirical results revealed that in the short and long run periods, the coefficients of
real total exports, external reserves, inflation rate and external debt have significant negative relationship with the
agricultural productivity in the country; whereas industry’s capacity utilization rate and nominal exchange rate
have positive association with agricultural productivity in both periods. However, per capita real GDP influence
on the agricultural productivity was positive and significant only in the ECM model. The empirical results were
further substantiated by the variance decomposition and impulse response analysis of the dependent variable
with respect to changes in the explanatory variables. Results obtained were in line with economic theory. The
findings call for appropriate short and long term economic policy packages that should stimulate investment
opportunities in the agricultural sector so as to increase agricultural component in the country’s total export.
Appropriate policy package to stabilize inflation rate in the country should be implemented. Also incentives
should be given to the industrial sector to boast production in order to increase capacity utilization and promote
backward integration policy of the sector. Diversification of the country’s economy and a drastic reduction in
external debt would boost agricultural productivity in the country.

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