The Impact of Agricultural Development On Nigeria Economic Growth, 1980– 2007
OBJECTIVES OF THE STUDY
The broad objective of this study is to determine the extent to which agricultural development influences economic growth in Nigeria.
1) To determine the cause of decline in agricultural production today.
REVIEW OF RELATED LITERATURE
The term “Agriculture” has been subjected to different definitions by various experts. As a result Ighodo (1984: 20) defined agriculture as the art and science of the cultivation of crops and rearing of animals for man’s use. He also emphasized that agriculture is also the production of fibres for industries, processing of farm produce, packaging and marketing of farm products. This definition is quite embracing as it covers all activities that ensure man’s survival. However, the aspect of research and training that is so vital in production was conspicuously missing in the definition.
In order to fill this gap, Ogwuma (1985: 5-8) defines agriculture as production of field crops, forestry, fishing and livestock, research and training of extension workers.
Production is only complete when it gets to the final consumers. It is in response to this economic doctrine that Anyanwu (1987:102) defined agriculture as involving cultivation of land, raising and rearing of animals for the purpose of providing food for man, feed for animals and raw materials for industries. It involves forestry, fishing, processing and marketing of these agricultural products.
Komolafe (1985), Adegoye (1985) and Adubi (2000) defined agriculture as the cultivation of soil for crop production and of looking after animals to produce better meat and other food products and also a process by which farm products are sold.
Simon Kuznet (1973) defined economic growth as a long term rise in the capacity to supply increasingly diverse economic goods to its population. It entails a sustainable rise in national output which is a manifestation of economic growth.
To Anyanwu (1997), the role of agriculture in transforming both the social and economic framework of an economy cannot be over-emphasized. In effect, it has been the main source of gainful employment from which the nation can feed its teeming population, providing the nation’s industries with local raw materials and as a reliable source of government revenue.
According to Adegoye and Dittah (1985), agricultural output can increase the level of income of farmers and the people. They said what constitutes the level of agricultural output will vary with the stage of economic development of a country.
For a purely subsistence economy, agricultural development will occur but not like in a fully developed economy. If there is enough food for the people and a marketable surplus is produced, it will increase the income of the peasants. The increased income generated would so provide means for them to purchase other necessities of life, which they cannot produce themselves. By this means, the standard of living of the peasants will improve and unemployment, underdevelopment will be reduced.
They stated that a fully developed economy, especially in agricultural sector, means increase in the production of export crops with an improvement in the quantity and grades of such export crops. For a country that has started to industrialize, agricultural output will be said to have acquired growth if agriculture can supply enough raw materials to the agro-allied industries.
Reynolds (1975: 215), revealed that agricultural development can promote the economic development by increasing the supply of food available for domestic consumption and releasing the labour needed for industrial employment. According to him, agricultural development can promote economic development of underdeveloped countries in four distinct ways:
RESEARCH AND METHODOLOGY
The methodology adopted in this study is the linear regression employing the technique of ordinary least square (OLS). The choice of OLS is guided by the fact that it has optimal properties which include, linearity, neutrality, sufficient least variance and mean square error.
These desirable properties of estimators can be obtained from any techniques but minimum variance property distinguishes the ordinary least square (OLS) estimators as the best when compared with other linear neutral estimators from econometric techniques. This particular property of smallest variance is the reason for the popularity of the OLS method. (Koutsoyiannis 1997).
AREA OF STUDY AND COVERAGE
This study covered the relationship between agricultural development and economic growth in Nigeria for a period of 27 years (1980 – 2007).
The process of economic development is one of continuous redefinition of the roles of agriculture, manufacturing, and services. Two empirical regularities characterize this structural transformation. First, at low levels of development, the shares of agriculture in gross domestic product (GDP) and in employment are large (up to 50 percent and 85 percent, respectively), of restrictions on labor mobility, which, given rapid growth outside of agriculture, is consistent with an increase in the rural urban divide. Second, there is a large and persistent gap between the share of agriculture in GDP and the share of agriculture in the labor force. These two stylized facts suggest an essential but evolving role for agriculture in fostering growth and reducing poverty.
This finding was investigated using Nigerian data settings. To carry out this empirical estimate, conventional examination of time series data confirms that macroeconomic variables relevant for this study are usually non stationary and co-integrated. To avoid the so called ‘spurious regression’, we therefore conducted a unit root test of stationary using the Augmented Dickey-Filler (ADF) test. The result is presented in Table 4.1 below:
UNIT ROOT TEST
As mentioned above, the first point of our analysis is to conduct the unit root test of stationarity using the Augmented Dickey-Filler (ADF) test. The result is presented in table 4.1
SUMMARY OF FINDINGS, POLICY
RECOMMENDATION AND CONCLUSION
Summary of findings
The study examined the impact of agricultural development on economic growth in Nigeria over the period of 1980 – 2007. The study employs Ordinary Least Square (OLS) method of estimation. The findings show that agricultural development in Nigeria has not responded to the desired levels that will impact positively to the economic growth. This finding was supported in literatures, where they attributed the problem of agricultural development to be more acute where people depend on rain-fed agriculture, and where the impact of new technologies has been less apparent and agricultural productivity has generally stagnated and even fallen in some areas, like the case of Nigeria. Apart from the insignificance of this core variable (agricultural development), every other variables included in the model proved significant in impacting on the growth of economy in Nigeria.
Sequel to the findings and careful investigation of the contribution of agricultural development towards economic growth, it is therefore pertinent to make the following policy implications to the government and all the agencies in charge of economic growth in Nigeria, that;
- Urgent attention should be given towards addressing critical constraints and challenges to current agricultural production and agricultural development.
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