Analysis of Agricultural Public Capital Expenditure and Agricultural Economic Growth in Nigeria 1961–2010
Ideba E. Ele
Department of Agricultural Economics and Extension, University of Calabar, P.M.B 1115, Calabar, Nigeria
Iniobong E. Okon
Department of Agricultural Economics and Extension, University of Calabar, P.M.B 1115, Calabar, Nigeria
Otu W. Ibok *
Department of Agricultural Economics and Resources Management, P.M.B 1167, Uyo, Nigeria
Itoro N. Brown
Department of Agricultural Economics and Extension, University of Calabar, P.M.B 1115, Calabar, Nigeria
*Author to whom correspondence should be addressed.
Abstract
Aims: This study investigated the impact of agricultural public capital expenditure on agricultural economic growth in Nigeria over the period 1961 to 2010.
Methodology: Annual data was used for this study and was obtained from Central Bank of Nigeria 2010 statistical bulletin and annual report. The data was analyzed using Augmented Dickey-Fuller test, Johansen maximum likelihood test and Granger Causality test.
Results: The result of the Johansen cointegration test showed that there exist a long run relationship between all the explanatory variables and explained variable. The result of parsimonious error correction model showed that agricultural capital expenditure had a positive impact on agricultural economic growth. Also, granger causality test showed a unidirectional relationship between agricultural capital expenditure and agricultural economic growth. This means that agricultural economic growth does not cause expansion of agricultural public capital expenditure rather; it indicates that agricultural public capital expenditure raises the nation's agricultural economic growth. The Error Correction Mechanism (ECM) indicated that if the economy is out of equilibrium, 5.2% of disequilibrium will be corrected for annually.
Conclusion: The study therefore recommends that the proportion of government capital expenditure that goes into agricultural expenditure financing should be increased
Keywords: Agricultural capital expenditure, agricultural economic growth, cointegration, long run, error correction mechanism