Benue State University, Makurdi

Government Agricultural Expenditure, Agricultural Output and Economic Growth in Nigeria: A Structural Vector Autoregressive Approach

Dennis Terpase Nomor and Emmanuel Terngu Udele

Abstract

The persistent rise in government agricultural spending amidst unsteady growth has become an empirical concern. This study therefore, examined how economic growth respond to government recurrent and capital agricultural expenditure through agricultural output channel in Nigeria from 1981-2022. The analytical technique utilized was Structural Vector Autoregressive (SVAR) model. The contemporaneous result indicated that agricultural output responds positively to government recurrent agricultural expenditure. Similarly, economic growth responded to agricultural output positively. Result further showed that agricultural output has negative contemporaneous response to government capital agricultural expenditure while agricultural output had positive instantaneous effect on economic growth in Nigeria. The study concluded that economic growth responded positively to government recurrent agricultural expenditure through agricultural output contrary to the adverse influence of government capital agricultural expenditure to economic growth through agricultural output in Nigeria. It was recommended among others that government should improve on monitoring the use of funds meant for capital agricultural projects to ensure overall efficiency.

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