What type of study is this?

This is a ARDL study (also classified as: Granger causality, Error Correction Mechanism, Augmented Dickey-Fuller test).

September 10, 2025

The Nexus of Agricultural Output and Economic Growthin Nigeria, an Ardl Approach

Puntos clave

A 1% increase in real GDP leads to a 24.83% increase in agricultural output, highlighting economic growth's influence.
The exchange rate negatively affects agricultural output, with a 1% increase in exchange rate and trade resulting in decreases of 10.68% and 1.67%, respectively.
Granger causality tests reveal a unidirectional causality from agricultural output to economic growth, emphasizing agriculture's role.
The study suggests effective policies, including managed exchange rates and increased budget allocation to agriculture, for sustainable development.

Resumen

This study investigates the nexus between agricultural output and economic growth in Nigeria from 1990 to 2023 using the Autoregressive Distributed Lag (ARDL) approach. Secondary time series data were sourced from the Central Bank of Nigeria Statistical Bulletin and the World Development Indicators. The analysis employed the Augmented Dickey-Fuller unit root test, ARDL bounds testing for co-integration, Error Correction Mechanism (ECM), and Granger causality tests. The long-run results reveal that real Gross Domestic Product (RGDP) has a positive and statistically significant impact on agricultural output, with a 1% increase in RGDP leading to a 24.83% rise in agricultural output. Conversely, exchange rate, trade, and inflation rate exhibit negative relationships with agricultural output, with exchange rate and trade being significant at 5%. Specifically, a 1% increase in the exchange rate and trade results in a 10.68% and 1.67% decrease in agricultural output, respectively. The short-run results are consistent, with RGDP showing a 21.18% positive effect and exchange rate and trade showing 9.13% and 1.43% negative effects, respectively. The ECM coefficient of -0.853 indicates a high speed of adjustment (85.3%) towards long-run equilibrium annually. Granger causality tests confirm a unidirectional causality from agricultural output to economic growth, emphasizing agriculture’s critical role in driving the Nigerian economy. The study recommends that the Central Bank of Nigeria adopt a managed exchange rate regime and inflation-targeting framework to stabilize macroeconomic conditions for agricultural growth. Additionally, the government should invest in agro-processing zones and rural infrastructure, and allocate at least 10% of the national budget to agriculture as per the Maputo Declaration to enhance productivity and ensure sustainable economic development.

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