Agricultural Economics and Extension Project Topics

The Impact of Agriculture on Economic Growth in Nigeria (1980-2014)

The Impact of Agriculture on Economic Growth in Nigeria (1980-2014)

The Impact of Agriculture on Economic Growth in Nigeria (1980-2014)

Chapter One

Objectives of the Study

The broad objective of this study is to determine the impact of agricultural on economic growth in Nigeria.

  1. To determine the impact of agricultural sector on the economic growth in
  2. To determine   the    effect    of    agricultural    sector    on employment creation in Nigeria



Theoretical Literatures

Classical theorists led by Arthur Levis’ in 1950s viewed economic development as a growth process of relocating factors of production, especially labor from an agricultural sector characterized by  low  productivity  and the use of traditional technology to a modern industrial sector with higher productivity. The continuation of agriculture to development was passive. Agriculture acted more as a source of  food  and  labor  than  a  source  of growth (Levis 1954).

Although passive, agricultural development was seen as necessary for successful economic transformation for two reasons:

  1. To ensure the supply of food and prevent rising food princes and real wages from undermining industrial development and
  2. To utilize land as an additional “Free” source of growth that would not compete with resources for industrial Levis (1954)

The Solow-Swan neoclassical growth theory and its extensions is a popularly adopted framework for analyzing the process of economic growth and development. Assuming a constant-return-to-scale aggregate production functions expressed as:

(1). Yt = Kt Lt Bt Where:

Y,K.L and B represent real GDP  per  capital,  real gross capital, labor and the Hicks-neutral productivity term, respectively. The contribution of agriculture to aggregate economic growth could be modeled via its effects on total factor productivity or as an intermediate input in the industrial production sector (Timmer, 1995: Ruttan 2000). Early development theories viewed agriculture as an important source of resources to finance the development of the industrial sector. Thus, agricultural production growth serves as an engine of growth for the overall economy.




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. (koursoyiannis 1997)

Area of Study and Coverage

This study covers the relationship between agriculture and economic growth in Nigeria for the period 1980 – 2014.

Model Specification

This research shall employ econometric method. According to Modalla (1992), this method gives the best technique for the verification and reputation of theories. It also provides quantitative estimation of the relationship among variables without much subjective judgment. The specification of econometric model is always based on economic theory or any available information relating to the phenomenon being studied (koutsoyiannis 1997).



Presentation of Result

The empirical results are presented in a table which shows the estimated parameters, the t-statistics and other diagnostic tests of equations.

Table 4.1.1 Dependent Variable, Real GDP




The study examined the impact of agriculture on economic growth of Nigeria and unemployment rate in Nigeria over the period of 1980 to 2014. The study employs ordinary least square (OLS) method of estimation.

The finding shows that agricultural development in Nigeria has positive impact on the economic growth in Nigeria.

From the result  of  this  finding,  all  the  variables  in the model including the care variable (Agricultural development) proved significant, which show that agricultural development has positively impact on the economic growth in Nigeria over the period under study.

Policy Recommendation

From  the  findings  and  careful  investigation  of  the contribution   of   agricultural   development   towards   economic growth, it is therefore necessary to make  the  following policy recommendation to the government and all the agencies in-charge of economic growth in Nigeria thus:

Considering the fact that agricultural development from the result of our findings, has been impacted positively to the growth of the economy in Nigeria,

The following recommendations were made:

The government needs to develop a modernized policy to help the sector to keep growing steadily as time moves on. Government should help the agricultural  sector  as far as it is concerned by encouraging commercial production of non-staple cash crops, particularly those that result in robust links to the non-farm sector, as this will be the major means to increase and improve employment for the rural poor.


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