The Impact of Agricultural Public Expenditure on Agricultural Productivity in Nigeria
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Date
2023-06
Authors
Alabi, Reuben Adeolu
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Abstract
This study analyzes the impact of agricultural public expenditure on agricultural
productivity in Nigeria. The relevant time series data for the study were obtained
from secondary sources. The data ranged from 1981 to 2014. An instrumental variable
two-stage least squares (IV-2SLS) econometric model was employed to investigate the
endogeneity of public agricultural expenditure, and the autoregressive distributed
lag (ARDL) econometric technique was used to determine the long and short-term
effects of public agricultural expenditure on agricultural productivity. The study
shows that 20% of agricultural public budgets were not implemented in Nigeria. On
average, agricultural public capital expenditure comprised 55% of total agricultural
public expenditure in Nigeria, which is lower than the recommended 60% for effective
agricultural sector performance. The study also reveals that while public agricultural
capital expenditure and agricultural public total expenditure are strong determinants
of agricultural productivity, agricultural public recurrent expenditure maintains a weak
relationship with agricultural productivity in Nigeria. Finally, the study demonstrates
that agricultural public spending on irrigation has the highest impact on agricultural
productivity, while agricultural public spending on subsidies has the least impact on
agricultural productivity. Among other recommendations, it is suggested that the
agricultural public expenditure pattern should be realigned to favour investments in
irrigation, research and development, and rural development, which currently attract
lower budgetary allocations in Nigerian agricultural budgets.