Public expenditure and agricultural productivity in Nigeria

Abstract

In a country like Nigeria, which operates on an agrarian economy, agricultural products serve as the essential foundation for sustainable development to thrive. In addition to serving as the main food source for a large segment of the population, the agricultural sector is vital in enhancing the GDP, thus remaining essential to the Nigerian economy. This study examined public expenditure on agricultural productivity in Nigeria from 1981 to 2023. An Augmented Dickey Fuller unit root test was employed to assess the correlation between agricultural output, total public expenditure, gross domestic product, agricultural value added, and the agricultural share of gross domestic production, which were found to be correlated in order one (1). In contrast, capital expenditures and recurrent expenditures were correlated in order zero (0). Furthermore, a co-integration bound test was conducted to explore long-term relationships, revealing that capital, recurrent expenditures, and agricultural production are interconnected in the long run. The short-run test results indicate that capital government expenditures and recurrent government expenditures do not significantly impact agricultural productivity. However, gross domestic product and agricultural value added are found to be statistically significant. Given the findings, it is advised that federal, state, and local governments increase their funding and capital investment in agricultural production. Establishing modern farming facilities would enhance large-scale production, consequently boosting GDP as well.