Empirical Analysis of Causal Linkage between Agricultural Output and Real GDP: Evidence from Nigeria

Abstract

The agricultural sector is pivotal in poverty alleviation, job creation and food supply. In recent times the performance of the sector leaves more to be desired as its proportion in aggregate output fluctuated as output expands. This study empirically analysed the causal linkage between the agricultural sector output and economic growth in Nigeria using annualized time series data covering 1981 to 2018. Data were analysed using the Granger causality test, vector autoregression, and impulse response and variance decomposition econometric tools. The empirical results indicate that agricultural output did not perfectly interlink with economic growth. The causality test revealed that economic growth precedes agricultural sector output in a uni-directional manner, while the impulse response analysis indicated that economic growth does not respond swiftly to innovations in agriculture. The findings of our study did not corroborate the predictions of agriculture-led growth theorized by Kuznets (1968).