GOVERNMENT SPENDING ON AGRICULTURE, ROAD INFRASTRUCTURE AND AGRICULTURAL PRODUCTIVITY IN NIGERIA

Abstract

It is natural to expect that aggregate agricultural output is positively related to government expenditure on agriculture and infrastructure development. However, little attention is paid to agricultural productivity and road infrastructure in Nigeria. Thus, the main objective of the study is to examine empirically the effect of government expenditure on agriculture and road infrastructure on agricultural output in Nigeria. Annual time series secondary data covering the period 1980 to 2020 were obtained from the world development indicators (WDI) published by the world bank, an statistical bulletin published by the central bank of Nigeria (CBN). Data collected were analysed using ARDL model. The Autoregressive Distributed Lag (ARDL) approach is significant to this study because the underlying repressors are both combination of I(1) and I(0) after pre testing of variables. Having empirically examined the impact of government expenditure on agriculture and road infrastructure on agricultural output in Nigeria, the results indicated that government expenditure on agriculture (t-statistic = 2.02) and (t-statistic = 2.24) has a positive short run and long run significant effect respectively on agricultural output in Nigeria. Also, a one percent change in government expenditure on road brought about changes in agricultural output performance in the negative direction in the short run and long run relationship. The value of the R-squared is 0.80, meaning that 80% of the dependent variable, agriculture output is explained by the independent variables in the model. R-squared is 75%, indicating good fit of the model. Finally, the model has -0.26 long-run reversions to equilibrium and it’s significant at 1% level. In conclusion, the outcome of the study disclosed that government expenditure on agriculture has a short run and long run significant effect on agricultural output in Nigeria. The study revealed government expenditure for road infrastructure development is lacking holistic technical evaluation and cost assessment. Hence, the study showed that to improve the agricultural output performance in Nigeria, government expenditure on agriculture and on road should be increased.