Project Abstract

<p>&nbsp;                 <b>ABSTRACT&nbsp;</b></p><p>This research was carried out to provide empirical information on the relationship between agricultural production and the growth of Nigerian economy with focus on poverty reduction. Time series data were employed in this research and the analyses of the data were done using unit root tests and the bounds (ARDL) testing approach to cointegration. The result of the data analysis indicated that agricultural production was significant in influencing the favourable trend of economic growth in Nigeria. Despite the growth of the Nigerian economy, poverty is still on the increase and this calls for a shift from monolithic oil-based economy to a more plural one with agriculture being the lead sector. It was recommended that pro poor policies should be designed for alleviating rural poverty through increased investments in agricultural development by the public and private sector. Keywords agriculture, cointegration, development, economic growth, poverty JEL E31, O11, O47, O55, Q10 <br></p>

Project Overview

<p> 1 Introduction&nbsp;</p><p>With 75% of the world’s poor in rural areas and most of them dependent on farming, agriculture must be part of world economic growth, poverty reduction, and environmental sustainability (UNDP, 2012). Agriculture is critical to achieving global poverty reduction targets and it is still the single most important productive sector in most lowincome countries, often in terms of its share of Gross Domestic Product and almost always in terms of the number of people it employs (IDA, 2009). In countries where the share of agriculture in overall employment is large, broad-based growth in agricultural incomes is essential to stimulate growth in the overall economy, including the non-farm sectors selling to rural people. Hence, the ability of agriculture to generate overall GDP growth and its comparative advantage in reducing poverty will vary from country to country (FAO, 2012). The majority of the poor and food insecure in Africa live in rural areas, and most of them depend on agriculture for their livelihoods. To support broad-based poverty reduction and food security in Africa, smallholder agriculture must be a central investment focus (GARVELINK et al., 2012). The sheer size of agriculture in most African economies suggests that strategies designed to promote the early stages of economic growth cannot ignore agriculture. The promotion of the rural economy in a sustainable way has the potential of increasing employment opportunities in rural areas, reducing regional income disparities, stemming pre-mature rural-urban migration, and ultimately reducing poverty at its very source (ANRÍQUEZ and STAMOULIS, 2007). The potential of agriculture to generate a more pro-poor growth process depends on the creation of new market opportunities that most benefit the rural poor (HANJRA and CULAS, 2011). Nigeria is a vast agricultural country “endowed with substantial natural resources” which include: 68 million hectares of arable land; fresh water resources covering about 12 million hectares, 960 kilometres of coastline and an ecological diversity which enables the country to produce a wide variety of crops and livestock, forestry and fisheries products (AROKOYO, 2012). Poverty in Nigeria is concentrated in rural areas, which are home to more than 70% of the nation’s poor. Development indicators for rural areas lag behind those for urban areas: incomes are lower, infant mortality rates are higher, life expectancy is shorter, illiteracy is more widespread, malnutrition is more prevalent, and greater proportions of people lack access to clean water and improved sanitation services (TSIGAS and EHUI, 2006). <br></p><p> One sector that has a critical role to play in poverty reduction in Nigeria is the agriculture sector as over 40% of the GDP comes from the sector and it employs about 60% of the working population (NWAFOR et al., 2011). However, the agriculture sector has the highest poverty incidence and tackling poverty entails tackling agricultural underdevelopment. Economic growth in Nigeria has largely been accounted for by resilient agricultural growth associated with performance in four constituent sub-sectors: crops, livestock, fisheries and forestry (EBOH et al., 2012). While the agricultural sector may have in recent years contributed significantly to improved growth performance in Nigeria, its actual contribution appears to be much short of overall potential. <br></p><p> Although several studies have outlined the theoretical relationship between agriculture and economic growth, disagreements still persist (AWOKUSE, 2009). The causal dynamics between agriculture and economic growth is an empirical question worthy of further investigation. As TIMMER (2005) noted, part of the controversy of the role of agriculture in development stems from the fact that structural transformation is a general equilibrium process that cannot be explained by looking at agriculture alone. The issue of how and under what conditions agriculture is a driving force of rural growth has received scant attention or has given mixed messages including in the position of major multilateral financing institutions (ANRIQUEZ et al., 2003). Despite the myriads of existing literature on the between agriculture and economic growth across the globe and in particular sub-Saharan Africa, there exists a relative dearth of empirical information on the relationship between agriculture and economic growth in Nigeria with a bigger picture on rural poverty. Therefore, this research was designed to fill the existing research gap by providing empirical information on agriculture-economic growth nexus and its implication for poverty reduction. <br></p>