THE IMPACT OF GOVERNMENT EXPENDITURE ON

AGRICULTURAL OUTPUTS IN NIGERIA

BY

ANI DEMILLE
REG. NO: 11/101124026

SUBMITTED TO

THE DEPARTMENT OF ECONOMICS

FACULTY OF SOCIAL SCIENCES
UNIVERSITY OF CALABAR
CALABAR-NIGERIA

IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE

AWARD OF BACHELOR OF SCIENCE DEGREE IN ECONOMICS

APRIL, 2017.
 DECLARATION

I declare that this project –The Impact of Government

Expenditure on Agricultural Outputs in Nigeria, was carried out by

me and not from any other institution for the award of a Bachelor

Degree.

ANI DEMILLE ………………………….

REG. NO: 11/101124026 DATE……………………..

 CERTIFICATION

I certify that this research work was carried out by

ANI DEMILLE of the Department of Economics, University of

Calabar.

………………………………… …………………………………..
MR OPUE JOB AGBA Date
Supervisor
Department of Economics
University of Calabar,
Calabar.
DEDICATION
ACKNOWLEDGEMENT
 ABSTRACT

This work examined and evaluated the impact of government

expenditure on agricultural outputs in Nigeria within the period

1984-2015. Based on the data collected from Central Bank of

Nigeria statistical Bulletin, the Ordinary Least Squares (OLS)

techniques was employed to analyze the effect of government

expenditure on the agricultural outputs. The overall result

confirms that government expenditure has a positive and

significant effect on agricultural output though not immediately

but after a year interval. The reason for this was attributed to the

fact that not all the allocations meant for agriculture in the

immediate instance was channeled into the agricultural sector.

The value of the constant term also reveals that agricultural

output could as well thrive through other factors outside

government expenditure. This was attributed to the support the

economy might have got from the private sector. We therefore

recommended that, among other policy recommendations, a

proper implementation and monitoring of government policies in

the agricultural sector, coupled with the combine efforts of the

private sector in boosting agriculture, the Nigerian economy

stands a better chance of developing at a faster pace than usual.

 TABLE OF CONTENTS

Title Page………………………………………………………………………………… i

Declaration …………………………………………………………………………….. ii

Certification ……………………………………………………………………………. iii

Dedication ……………………………………………………………………………… iv

Acknowledgement …………………………………………………………………. V

Abstract ………………………………………………………………………………… vi

CHAPTER ONE

INTRODUCTION

1.1 Background of the study

1.2 Statement of the problem

1.3 Objectives of the study

1.4 Research hypothesis

1.5 Significance of the study

1.6 Scope of the study

1.7 Organization of the study

CHAPTER TWO

LITERATURE REVIEW AND THEORETICAL FRAMEWORK

2.1 Literature review

2.2 Theoretical framework.

2.2.1 The Keynesian theory.

2.2.2The Harrod-Domar model.

2.2.3The monetarist theory.

2.2.4Theory of Agricultural fundamentalism.

CHAPTER THREE

RESEARCH METHOLOGY/MODEL SPECIFICATION

3.1 Background, structure and composition of the Nigerian

Agricultural sector.

3.2 The role of agriculture in the economic development in

Nigeria.
3.3 Effects of government in agricultural development in Nigeria.

3.4 Challenges of Agricultural development in Nigeria.

3.5 Model specification, estimation and validation.

3.6 Research methodology

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

4.1 Analysis of result

4.2 Presentation of the result and analysis

4.3 Policy implications

CHAPTER FIVE

SUMMARY, RECOMMENDATIONS AND CONCLUSION

5.1 Summary of findings

5.2 Recommendations

5.3 Conclusion

REFERENCES
APPENDIX
 CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Government participates in severally revenue generated

activities in order to create funds to facilitate both capital and

recurrent expenditure. Government expenditure is projected

towards protecting its citizens and promotes their social and

economic welfares.

Increasing government spending on agriculture should be

complemented with stable macro-economic policies where

inflation is kept under control. Internal and external debt remain

manageable and macro economic crisis that emerge are resolved

quickly protecting import duties on imported food items and

heavy pubic investment in the area of land development and

management, infrastructural development.

Agricultural sector in Nigeria was the most dominant

sector before the early 1970s. In the 1970s, it was the major

development drive of the nation’s economy employing over 80%

of the active population. (Anyanwu et al, 1997). Its contribution

was over 60% of the nations cross Domestic product (GDP) and

provided nearly 100% of the nation’s food requirement, raw

material to individuals and the country’s export earnings among

others. The period towards the early 1970s there were essential

growth in the sector, but during the oil boom era, when crude oil

became the major export earner, agriculture started to reduce in

importance as its contribution to GDP began to decline from over

60% in early 70s to 30% and 40% (Aigbokhan, 2001) and less

than 26% between 2000 and 2007 (CBN, 2007). These shows

that the discovery of oil as the fastest means of revenue, brought

about serious relegation of agriculture.

Due to the aforementioned problem, over a decade,

government policies have been shifted towards stimulating

economic development with the ultimate goal of transforming the

economy into an industrialized one as well as increasing the

welfare of the people. One of the sectors expected to act as a

change towards the actualization of this demand of the people

and the industries.

 However, in order to increase the output of agricultural

sector, government over the years has been given priority to

agriculture in its budget, directing financial institutions to make

credit available to farmers. Agricultural credit scheme is expected

to play a vital role in agricultural development. (Duong and

Izumida, 2002). Agricultural credit has over the years been

indentified as a major input in the development of the agricultural

sector in Nigeria (CBN, 2005). According to Raji and Fakayode

(2009), the decline in the contribution of the sector to the

Nigerian economy has been shifted to the lack of a formal

national credit policy and paucity of credit institution which can

assist farmers in buying of farm inputs. Swinnen and Gom

(1999), the provision of these input by the sector is important

because credit or Loanable fund helps in determining access to all

the needed inputs to facilitate farming. Access to agricultural

credit these input s been terribly constrained in developing

countries due to the imperfection and costly information barriers

encountered in the financial markets. Such problems are common

and particularly vital in agriculture (Stiglitz, 1993).

 Indeed, to reduce the prevailing problem of credit supply to

agricultural sector, government of Nigeria came up with the

Agricultural Credit Guarantee Scheme (ACGS) in 1978, with the

objective of producing guarantee in respect to loans granted for

agricultural purpose by ray bank in accordance with the provision

of the act and with the aim of increasing the level of bank credit

to the increasing sector (Anyanwu et al, 1997). In addition, when

the gentle appeals, to make loans and advances available to

agricultural sector by commercial banks.

As the major objective of this research we shall empirically

estimate has the vision government expensive, contributions of

other financial institutions have affected agricultural output in

Nigeria.

1.2 STATEMENT OF THE PROBLEM

Even with the level of government expenditure on

agriculture in the past and with little effort now, agricultural

outputs still remains very low. Since the discovery of the oil
sector, agricultural sector has been relegated leading to the

importation of food to feed the teeming population in Nigeria.

However, before 1960s and 1970s, agriculture was the

mainstay of Nigeria’s economy and the major foreign exchange

earners in Nigeria. After 1970s, oil became the mainstay of the

Nigerian economy shifting agriculture to the button.

This research work is to analyze the impact of government

expenditure on agricultural outputs in Nigeria. The serious

question that worry every Nigerian is, has the government

expenditure over the years contributed positively to the

development of agricultural output (sector) in Nigeria?

The big answer to this question is the irony of life in our

agricultural sector. This stems from the lackadaisical attitude of

the Nigerian government towards agricultural sector since the

advent of the oil sector. The oil sector crippled the agricultural

sector with a shelf in concentration and serenely caused a total

lagging of the country’s agriculture and thereby thwarting

agriculture which was formerly the mainstay of our

economy(Somerekun, 1993).

Despite the huge sums of money allocated to the agricultural

sector during the years there was little or no improvement in

agriculture production because successive government only used

the policies /programmes to embezzle public funds to the total

neglect of food production.

In effect there is still persistent problem of food shortage,

high cost of food items and a continual rise in the value of

imported food. Agricultural commodities are also not sufficient

enough to meet our industries. Perhaps, agricultural export is still

on the decline leading to a reduction of agricultural quota to the

national output.

1.3 OBJECTIVES OF THE STUDY

The main objective of this research is to examine the impact

of government expenditure on agricultural output in Nigeria. The

specific objectives are:

 1. To analyze the extent to which government expenditure has

affected overall agricultural output comprising of crops,

livestock, forestry and fishing in Nigeria.

2. To ascertain the problems associated with agricultural

financing in Nigeria.

3. To make policy recommendations.

1.4 RESEARCH HYPOTHESIS

The following hypothesis will be tested in this research:

H0: There is no significant relationship between Government

Expenditure and Agricultural Output in Nigeria.

1.5 SIGNIFICANT OF THE STUDY

Imperatively this research work affords us the opportunity to

know the impact of Government Expenditure on Agricultural

output in Nigeria. This research would assist us in solving most of

the basic problems that are confronting agricultural sector

development in Nigeria.

The significance of this research is to contribute its quota of

the research and at the end be a powerful tool/policy instrument

for the policy makers, the general public, students, researcher,

and those in the agricultural practice in Nigeria. Also for the

government to involve in partnership with the true farmers by

giving them subsidies, grants, loans, acids in the form of

fertilizers, insecticides, chemical and pesticides, and even send

extension experts to the rural areas to teach them how to apply

the new method of farming.

1.6 SCOPE OF THE STUDY

This study is centered on the impact of government

expenditure on agricultural outputs in Nigerian. It Covers the

period 1984 to 2015. This is the sample period of 32 years. This

period in characterized by decline in agricultural outputs leading

to the importation of food items, the period of economic slump,

depression and recession.

1.7 ORGANIZATION OF THE STUDY

This research in organized into five chapel chapter one

consist of the background, statement of the problem, research

hypothesis, objectives of the study, significance of the study,

scope of the study and the organization of the study.

Chapter two consists of literature review and the theoretical

framework.

Chapter three focuses on the historical background,

structure and the composition of the Nigeria agricultural sector,

the role of agriculture in the economic development in Nigeria,

and the efforts of government in agricultural development in

Nigeria.

Chapter four presents the analysis of data, interpretation of

result and policy implication.

 Chapter five, deals with the summary of major findings,

policy recommendation and conclusion.

 CHAPTER TWO

LITERATURE REVIEW AND THEORETICAL FRAMEWORK

2.1 LITERATURE REVIEW

This chapter reviews related literatures in this area of study.

Works of other scholars that are related to this study are re-

examined.

France rural economic survey (1949) defined agricultural as

a work for the purpose of harnessing forces of nature and use

plants and animals to provide to human need.

The encyclopedia Americana (1998) stated that “Agriculture

is the systematic raising of useful plants, field crops by human

management as well as animal husbandry”.

According to oxford advanced learners dictionary,

Agriculture is the science or practice of farming.

Also, Anyanwu, et al (1997), “Agricultural involves the

cultivation of land, raising and rearing of animals, for the purpose

of the production of food for man, feed for animals and raw
materials for industries. It involves cropping, livestock, forestry,

fishing and the processing and marketing of these agricultural

products. Basically, it is composed of crop proclaimed, livestock,

forestry and lashing”. He also explained that, agriculture is

essential for expansion of employment opportunity, reduction of

poverty, improvement of income distribution, speeding up

industrialization and easing the problems of balance of payments.

This emphasizes the importance of agriculture to both national

economic growth and development. This implies that agriculture

has a fundamental role to play in the economic development of a

nation. Therefore, agriculture should be given proper financing.

Ukpong, G (1991) on agricultural financing, noted that

adequate financing is necessary. Channeling finance and credit to

the sector for their operational efficiency should be enhanced to

ensure that resources or funds available reach their recipients.

The financial institution should design their lending programmes

to accommodate rural conditions and needs. He also suggested

that proper appraised to projects should be done to ensure

viability and reduce project defaults.

 McGraw hill Encyclopedia (1987-1999) defined agriculture as

comprising the entre range of technologies associated with the

production of useful produce from plants and animals

management and including oil cultivation, crop and livestock

management and activities of processing and marketing.

In a study conducted by Afala (1968) in support of

government intervention in agricultural growth he noted that it is

justified when the allocation mechanism is either unacceptable or

inefficient. The advent of this school of through believers when

the mallet system completely collapses then the government has

to take over.

Balogun and Our (1991), evaluates through economic

method the influence of credits polices on both institutional

lending and borrowing behaviors of farmers and ascertains the

relations between credit and agricultural development: the results

show that credit quota and portfolio ceiling devices and the

pursuit of cheap interest rate polices associated with the plough

back of rural savings mobilization and availability of guarantee

was marginally effective for Farmers’ demands for credit

subsidies, relative profitability of the farming enterprise vis-à-vis,

manufacturing investment portfolios and availability guarantees.

The study also show that there is a positive but inelastic

relationship between credit and agriculture output.

However, according to Ojo, M.O. (1986), despite the

intensified action of government financial assistance of the sector,

the height of agricultural production has been really

disappointing. The study shows that while, government

assistance to agriculture in terms of its annual budgets, provision

of credit and financial incentives has been sustained the

programme itself has yet yielded or provided the expected result.

John and Meller (1961) examined theoretically the role of

agriculture in economic development. In doing this, they

attempted to emphasize features that have high degree of

generality. They also acknowledge the fact that the variety that is

so characteristic of agriculture inevitability limits the validity of a

condensed general treatment. They concluded that in spite of the

significance of agriculture’s contribution to the requirements for

development capital, there should be a “balance growth” in the

scene and a simultaneous effort to promote agricultural and

industrial development.

In explaining the slow pace of agricultural growth rate in

South Asian countries, Myint (1964) attributed it to the

population pressure but added that there cannot be a

consideration of population pressure without reference to

agricultural techniques and government policies to encourage

agricultural productivity.

2.2 THEORETICAL FRAMEWORK

The theory of the “impact of Government expenditure on

agricultural outputs in Nigeria” has been categorized into four,

namely- The Keynesian, Harrod-Domar, Monetarist and

Agricultural fundamentalism theory.

The following will be judiciously examined.

2.2.1 THE KEYNESIAN THEORY

For many years, the views of the classicalist prevailed until

the time of the great depression in the 1930s. Then money

supply could no longer stop inflation from rising, including

unemployment which the classicalist assume to be constant. In

1936, John Maynard Keynes published his “General Theory of

Employment, Interest rate and Money”. He frowned against

monetary policy and recommended fiscal policy.

The Keynesians, are those group of economists who believe

that “although fiscal instruments of economic stabilization, fiscal

policy is more potent “their views follows directly from the

assessment of the empirical evidence concerning three critical

economic relations. These includes the relationship between the

interest rate and the demand for money as summarized in the

relationship between the interest rate and aggregate expenditure,

the relationship between interest rate and investment as

summarized by marginal efficiency of investment and the

relationship between interest rate and inflation.

 Keynes saw fluctuations in aggregate demand as the major

sources of economic disturbance thus, the Keynesian theory

highlight the potential of fiscal policy tool capable of reducing

fluctuations in government expenditure is direct addition to

aggregate demand and also reducing tax rate will have effect of

increasing consumption and investment expenditure. Hence when

an economy is operating below its potential output, the Keynesian

model suggests that government should institute “expansionary

fiscal policy”. In order words, government purchase should be

expanded and tax should be reduced (Onuigbo, 1992).

Consequently, when demand exceeds the economy’s potential

output, the basic Keynesian model however, indicates the

restrictive fiscal policy could be used to aggregate demand.

2.2.2 THE HARROD-DOMAR MODEL

Professor R.F. Harrod and Domar are two advanced

economist, they both are interested in discovering the rate of

income growth necessary for the economy. Harrod and Domar

assign a prominent role to investment in the process of economic

growth. But, they lay emphasis on the dual character of

investment. Firstly, it creates income and secondly, it augments

the productive capacity of the economy by increasing its capital

stock. The former may be regarded as the “demand effect” and

the latter the “supply effect” of investment. Hence so long as net

investment is taking place, real income and output will continue

to expand. However, for maintaining a full employment

equilibrium level of income from year to year, it is necessary that

both real income and output should expand at the same rate at

which the productive capacity of the capital stock is expanding.

Otherwise, any divergence between the two will lead to excess or

idle capacity, thus forcing entrepreneurs to curtail their

investment expenditure. Ultimately, it will adversely affect the

economy by lowering incomes and employment in the subsequent

periods and moving the economy off the equilibrium path of

steady growth. Thus, if full employment is to be maintained in the

long run, net investment should expand continuously. This further

requires continuous growth to ensure full capacity use of a

growing stock of capital. This required rate of income growth may

be called the warranted rate of growth or “the full capacity

growth rate”.

2.2.3 THE MONETARIST THEORY

The monetarists are fondly referred to as the modern

quantity theorist. They developed theory as a challenge to the

Keynesian revolution in the 1960s and 1970s. This resulted to the

fact that, Keynes theory failed to solve the persistent problem of

inflation and unemployment. The monetarist believed that, the

economy is predominantly competitive and that prices change

smoothly, efficiently to equate demand with supply in each

market. They have considerable faith in the economy to correct

any imbalance that may arise without external assistance and

believed that sustained period of high unemployment and

inflation is caused by government interference in the economy

(Evans and Mark Peace, 1979). They believer that to stabilize any

distortion in the economy modeling policy should be used, they

are much less optimistic about the efficiency of fecal policy then

the Keynesians. They believe that the financial implications of

fiscal policy are often overlooked.

As regard the monetarists, if money supply is property

adjusted, spending, price and employment will adjust

automatically and the economy will run property (Froyen, 1986).

They argue that there is a direct link between money supply and

cross national product (GNP) and that government expenditure

multiplier is positive for a few quarters, by zero in the run give

constant supply of money. This monetary policy they believe is

more effective then fiscal policy.

The basis of the disagreement between Monetarist and post-

keynesians stem from a basic difference of opinion about how to

view the economy including the macro economic forces in the

economy as they tactically operate. Those who accept the post

Keynesian view of the economy and the macro economic forces at

work see government as playing an important role in maintaining

a stable growing economy primarily through fiscal policy, taxing

more and spending more to speed up spending, while some

economist advocate for expansionary monetary policy.

Robert Rossa holds on one hand that monetary policy is a

patient tool for regulatory private spending and economic

activities. A study conducted by Anderson and Jordan give price

to monetary policy (Froyen, 1985).

Joan Robinson on the other hand, conceded that increases in

the quantity of money might result in higher price level, but this

is so only if it leads to a reduction in interest rates which

stimulates investment (Travas, 1981).

The study of Brown, Acho and Karekan holds that fiscal

policy, operating on disposable income is more powerful

stabilizer, achieving as half its effects within six months (Johnson,

1967).

2.2.4 THEORY OF AGRICULTURAL FUNDAMENTALISM

 Agricultural fundamentalism stipulates that, with a low level

of income per capita the vast majority of the population is

employed in agriculture and has its consumption and investment

requirements satisfied by agriculture.

Some growth theorist in the world over has advocated the

fundamentalism of agriculture as a pre-requisite for long-term

economic development. In the word of professor Nyodal, “it is in

the agricultural sector that the battle for long-term economic

development will be won or lost.

The fundamentalists argue that agriculture is the bed for

sustained economic growth and development. Also, if agriculture

is staved, industry could be said to be hurt.

 CHAPTER THREE

HISTORICAL BACKGROUND

3.1 STRUCTURE AND THE COMPOSITION OF THE NIGERIAN

AGRICULTURAL SECTOR.

In the pre-colonial era, Nigeria has a fairly complex social

organisation, which were predominantly peasant communities

that produce a variety of commodities to satisfy their teeming

needs, with little or no surplus to supply for exchange with other

communities. Trade was based on the barter system while

agriculture was for subsistence purpose. However, the

advent of the colonial masters introduced a money economy

among the peasant communities thus providing an incentive to

produce more cash crops for export to Europe by the peasant

farmers.

Nigerian communities produced a diversity of crops and this

was a strong reflection of their diverse and dynamic physical

environment. Food crops produce includes yam, Cassava,

Cocoyam, millet maize etc. while cash crops includes Palm oil,

groundnuts, cocoa, and cotton etc.

Helleiner (1966) goes thus, export production accounted for

about 57% of Nigeria Cross Domestic Product (GDP) in 1929. Oil

palm products only accounted for between 85% and 90% of the

total volume of exports during that same period.

He also noted that the growth of the Nigeria agricultural

sector was, however not smooth. The period between 1929 and

1945 was a wary difficult one for the export sector. The great

depression of the 1930s was marked by fluctuations in world

commodity prices. These disturbances lasted till the end of the

war. Although the volume of Nigeria’s export commodities

increased during that time, the value did not increase

proportionately to the volume.

The period between 1945 and 1954 saw another era of

export boom for Nigeria’s cash crops. The world economy was

just recovering from the effect of the second world war and

demand for primary products to revitalize the industries of the

advanced countries destroyed during the war was increased. As

such prices of primary product rose to higher levels. Also, the

threat of another world war with the outbreak of the Korean war

in 1950 was a major factor that influenced the prices for

commodities. However, after 1954 the export boom gave birth to

another period of price instability.

The country’s reliance on agriculture and the instability of

prices of agricultural produce and income, necessitated the

establishment of marketing boards. These marketing boards had

monopolistic disposition of crop from peasant farmers, and sell it

abroad. The marketing board, played an important role of

stabilizing farm income and generating funds for the execution of

development project in the country.

The system of agriculture with the production in the country

in still primitive, with the use of hoe, and cutlasses as their major

implements irrespective of the fact that agriculture is very

important to the economic development of the nation.

 The role of agriculture in the economic development of the

nation has been on the downside since independence, especially

after the discovery of oil in a commercial quality.

As regard to Anyanwu J.C. et al (1997), the agricultural

sector is the primary industry-they include farming, which are

livestock rearing, fishing and forestry. Productivity is very low due

to the inadequate application of modern equipment such as

tractors and chemicals.

Shifting cultivation, which has perhaps almost completely

disappeared in most part of the world is still widely practiced by

peasant farmer, this is due to fragmentation of farm holdings.

Also, livestock farming which is predominately practiced in the

north is undertaken by large number of cattle (nomadic) Fulani

who wonder from place to place in search of good pasture for

their cattle. Many fishermen who use canoes carry on fishing

along the coast.

 This structure of agriculture makes it laborious, tedious and

poorly remunerative. This fragmentation therefore makes it

difficult for farmers to secure bank loans.

3.2 THE ROLE OF AGRICULTURE IN THE ECONOMIC

DEVELOPMENT OF NIGERIA

The role of agriculture in the economic development of

Nigeria can be examined in terms of the contribution of

agriculture to the development of the Nigerian economy.

According to Reynolds (1975), agricultural development can

promote the economic development of the underdeveloped-that

is the third world countries like Nigeria in four different ways.

Thus:

1. By increasing the supply of domestic savings

2. By providing the foreign exchange earned by agricultural

exports.

3. By enlarging the size of the domestic market for the

manufacturing sector.
4. And also be increasing the supply of food available for

domestic consumption and releasing the labour needed for

industrial employment.

Omawale and Rodriguez (1979) in their own contribution

opined that, for most developing countries, agriculture has

been assigned on important role in national development. To

them, agriculture has been seen as a means of reducing

dependence on certain importations, containing food prices,

increase earning foreign exchange, absorbing many new

entrants to the labour market, increasing farm incomes at

times of severe unemployment and rural poverty.

In conjunction with the views above Johnson (1990) writes

that the appraisal of agriculture’s contribution or role in the

national economy can be made using four primary criteria

namely:

1. The proportion of the population engaged in agriculture

2. The share of agriculture in the Gross Domestic production

3. The proportion of the nation’s resources (other than labour).

 4. Also the contribution of agricultural sector to foreign trade.

In attempt to assess the role of agriculture in the economic

development (output) of Nigeria, it is pertinent to look at its

contribution to food supply, employment Gross Domestic

product (GDP), export earnings and balance of payments.

1 AGRICULTURE AND FOOD SUPPLY

In recent year, Nigeria has not been able to produce enough

food to meet the needs of her populace, rather there has been an

increase in the importation food to supplement the domestically

produce ones.

The table below shows that food imports have accounted for

about 9.15% of total imports on the average between 1970-2003

it also reveals that Nigeria has become a high importer of food

stuff with food bill accounting for 14.71% of 1991 total import bill

as against 6.87 in 1970. This reveals a collapse of the agricultural

sector. This does not go well with the country’s economy.

THE NIGERIA IMPORT AND FOOD IMPORTS (1970-2003)

Year Total imports Food imports Food imports 45% of

total imports.

1970 524.70 57.7 10.99

1971 606.48 88.3 14.55

1972 991.43 95.83 9.66

1973 1224.79 126.26 10.5

1974 1737.32 154.77 8.9

1975 3737.55 298:81 8.0

1976 5134.73 441:70 8.6

1977 7368.4 7480.7 101.5

1978 8136.4 1027.6 12.6

1979 6170.4 952.2 15.4

1980 9095.6 1437.5 15.8

1981 12613.9 1819.6 14.4

1982 10100.2 1642.2 16.2

1983 1666.7 1296.7 19.7

1984 4484.5 843.2 18.8

1985 5536.9 940.6 16.9

1986 5973.6 801.9 13.4

1987 15695.3 1646.5 10.4

1988 13831.3 1220.0 8.8

1989 30860.2 2108.9 6.8

1990 45417.2 3474.5 7.5

1991 89488.2 6055.1 6.7

1992 143151.2 12597.2 8.7

1993 166.1004 131.92.9 7.9

1994 162.788.8 13.952.4 8.5

1995 755.127.7 88.349.9 11.5

1996 562.020.6 75.392.0 13.4

1997 855.716.6 100.728.3 11.9

1998 837.418.7 102.165.1 12.2

1999 862.515.7 103.489.8 11.9

2000 962.963.9 133.639.5 11.8

2001 135769.0 160.209.1 11.8

2002 1580527.2 176.993.5 11.1

2003 1956.1104 226.112.5 11.5

(Source: CBN Economic and Financial Review, 2003)

2 AGRICULTURE AND EMPLOYMENT

Agriculture in Nigeria provides employment of about 80% for

her rural population. World bank report puts it that Nigeria

agricultural sector employed 71% of the total labour force in

1960 reducing to 56% in 1977 it rose to 68% 1980 and fell to

55% in 1985, 54% in 1986, 55% in 1988.

In the course of development, agricultural share to total

labour force is expected to decrease. It is however important that

agricultural labour productivity increase so as to compensate for

the outflow of labour and also to have expanding non-agricultural

employment opportunities to absorb the migration of Labor from

the agriculture sector.

According to Anyanwu J.C. et al (1977), it is necessary to

point that given the importance of labour in agriculture of most

African nations including Nigeria and the poor labour absorptive

capacity of their industrial sectors, rapid output of labour from

the agricultural sector has generated not only, social but also

economic problems.

3. AGRICULTURE AND EXPORT EARNING

The benefit of agriculture to export earnings can be

measured from its contributing to total export, between 1960 and

1975, the contribution of agricultural to export earning increased

in absolute terms over the years from 282.4 million in 1960 to

138, 527.5 million in 2003. However, its relative share declined

from 83.2% to only 1.8% in 2003.

This decline can be attributed to three factors

(a) The dominance of the petroleum sector,

(b) The reduction in the demand for primary products

(c) The increase in the use of agricultural produce by local

factories.
 There is therefore the need to divice a strategy to ensuring

agricultural growth in order to increase both local consumption

and export.

4. AGRICULTURE AND BALANCE OF PAYMENT

Agriculture helps in improving the balance if payments

situation through increase output of individual raw materials,

hence reducing dependence on imported inputs. Agriculture

therefore performs the functions of easing the presure of balance

of payments. Agriculture performed this role in Nigeria in the

1960s and before the advent of black gold (crude oil). The

combined effects of the short fall led to balance of payment

deficits from 1980 to 1984. While net supluses of #1.8 million

and 2.4 billion were recorded in 1976 and 1980-1981 deficits

stood at 7,194.9 having fallen from 13,615.9 million in 1993 and

in 203 it was 11,185.3 million naira. This therefore, confirms a

greater need for renewed attention to our agricultural sector

(Anyanwu, J.C, et al, 2003).

3.3 EFFORTS OF GOVERNMENT IN AGRICULTURAL

DEVELOPMENT IN NIGERIA.

Years in memorial, Nigeria has embarked on a number of

policy measures and programme in an attempt in reconstructing

and reforming the agricultural sector. Appropriate institutions and

public services were designed to strengthen the economic

position of the independent farmer. These measures and

programmes are being discussed as flows:

(a) THE NATIONAL ACCELERATED FOOD PRODUCTION

PROJECT (NAFPP)

The need to induce farmers to boost food production within the

shortest possible time. Led to the establishment of NAFPP in

1973. The programme was based in the green revolution concept

and experience of Mexico, India, Philippines and Pakistan. The

main aim was fasten food production like rice, millet sorghum,

maize, wheat and cassava. The programme was faced with the

problem of inadequate financing inadequate commitment of some

state government, inadequate publicity and poor infrastructural

falsities.

(b) OPERATION FEED THE NATION (OFN)

Operation feed the nation (OFN) was launched in may 1976,

mainly to increase food production and to eventually attain

self-sufficiency in food supply in the country. Also to encourage

section of the population that relies on the purchase of food

crops to grow their own. Under this scheme, moral, material

and technical assistance were given to farmers to help

increases food production. Also, inputs were distributed to

farmer at subsided rates. The scheme was a total failure as

several factors like inadequate human and material resources,

faulted the campaign strategy, and faulty administrative

system led to its death.

 (c) NIGERIA AGRICULTURAL AND COOPERATIVE BANK

(NACB)

It was the desire to faster growth in the quantity and quality of

credit to the agricultural sector that led to the formation of the

Nigeria Agricultural cooperative and bank (NACD) in April 1973.

Its aim was to improve storage facilities of agricultural products

and to promote marketing of agricultural products. There are no

credit facilities offered by the bank. Namely direct lending to

individuals farmer and organizations and on-lending to

established institutions namely state governments and co-

operative bodies against guarantees for on lending to third

parties. At 1995, the banks had given loans on 68.945 project

amounting to 3,179.6 million with direct lending with 62.4%.

Despite the performance, the quality of loans granted to small

holder’s farmers has proved grossly inadequate.

 (d) THE GREEN REVOLUTION

The green revolution was launched by the Shehu Shagari

administration in 1980. Their objective was centered on self-

reliance in food production and on the diversification of Nigeria

sources of foreign exchange earnings. In order to achieve this

objective, all known constraints to increase food production was

to be removed. A new system of input subsidies and crop pricing

polices were. Streamlined while construction of rural physical

infrastructure was embarked upon through massive federal food

allocation

OTHER MEASURED ADOPTED BY NIGERIA GOVERNMENT TO

REVAMP AGRICULTURE INCLUDES:

(a) RURAL BANKING SCHEME: It was established in 1975,

aimed at mobilizing rural savings to enhance agricultural

production through increased capital financing by rural

populace.
 (b) LAND USE DECREE OF 1978: This was aimed at

reforming the land tenure system, which has been a great

obstacle to agricultural development in Nigeria.

(c) AGRICULTURE DEVELOPMENT PROJECT (ADP): It

was established first in 1974 to provide infrastructural

facilities, farm services centre, supply of farm inputs and

extension training for the rural farmers.

(d) NATIONAL AGRICULTURE LANDS DEVELOPMENT

AUTHORITY (NALDA): This was established in 1991 to

execute a national agricultural land development

programme to moderate the chronic problems of law

utilization of abundant farmland.

3.4 CHALLENGES OF AGRICULTURAL DEVELOPMENT IN

NIGERIA

Challenges or problems facing agricultural development in

Nigeria includes: Environmental constraint, land constraint,

labour and manpower constraint and also capital constraints.

 (i) ENVIRONMENTAL CONSTRAINT

Environment constraint to agricultural development in Nigeria

arises from climatic conditions dictated largely by the country’s

location in the tropics. Thus bringing about a reduction in

agricultural yield (output). These problems includes excessive

heat at certain periods, sudden climatic fluctuation leading to

draughts, Meteorological changes, poor land use and inadequate

water control scheme (Du Bois, 1978; Nicholson, 1986).

(ii) LAND CONSTRAINT

Although land has been considered as the most abundant

resources for agricultural production in Nigeria, yet there are

difficulties associated with it. High population density has brought

about great pressure on the land. Also there have been

competing alternative uses for land, hitherto used for agricultural

production.

More so, most land is low in fertility and the cost of utilizing

some virgin land is enormous. Also, the land tenure system does

not help in increasing agricultural production.

(iii) LABOUR AND MANPOWER CONSTRAINT

Labour constraint on agricultural productivity in Nigeria is in

two forms: Shortage of labour on farms and the productivity of

available labour is very low, while manpower constraint on

agricultural development is in the form of inadequate skilled

personnel for effectively formulating and implementing

government agricultural development programmes.

(iv) CAPITAL CONSTRAINT

The two main sources of agricultural capital are government

for services and infrastructure and credit, these two sources of

capital has been inadequate and has slowed down agricultural

development in Nigeria. Government capital expenditure on

agriculture is low and credits from banks are inadequate and very

difficult to obtain.

(v) MARKET AND PRICE CONSTRAINTS

The market situation in Nigeria has not been good enough to

encourage producers to produce more. Also, agricultural prices

have been unstable and government agricultural pricing polices

have been discouraging. Hence, production is reduced.

(vi) TECHNICAL CONSTRAINT

This is also as a result of primitive farming implements and

when modern machine are used it is on a very small scale. This is

a result of bad research system and the lack of technical

innovation, especially in the agricultural sector.

 CHAPTER FOUR

RESEARCH METHODOLOGY, DATA PRESENTATION AND

ANALYSIS

4.1 MODEL SPECIFICATION

The Keynesian expenditure model will be adopted to explain

the relationship between government expenditure and

agricultural output. However, government expenditure is not

the only factor that determines agricultural output. there are

other factors like foreign exchange rate, credit to agricultural

sector in Nigeria, world prices of agricultural product in naira,

government expenditure in naira, foreign private investment in

naira, labour infrastructure etc.

But for this model, we will adopt only government

expenditure on agriculture and its lagged values from the first to

the third year period. This model is formulated as:

AGDP = f (CEA, CEA(-1),CEA(-2), CEA(-3)) ……………(3.1)

The model can be explicitly presented in linear form as:

AGDP = b0 + b1CEA + b2CEA(-1) + b3CEA(-2) + b4CEA(-3) + e…(3.2)

Where

AGDP = Agricultural output in N’million

CEA = Capital expenditure on agriculture in N’million

CEA(-1) = CEA lagged one year

CEA(-2) = CEA lagged two years

CEA(-3) = CEA lagged three years

e = Stochastic disturbance term.

bo, b1,…, b4 = Parameter estimates.

However, on apriori, we have that, b1>0, b2 >0, b3 >0, and b4>0.

4.2 METHOD OF ESTIMATION AND VALIDATION

To obtain an empirical evidence to test the explanatory

power of some of the variables in our given models and to also

investigate and ascertain the true position of some of the

conclusions made in the research works reviewed in the

preceding chapters, we employ an econometric technique to

enable us estimate and validate our model of equation 3.2.

The method of estimation we adopt is the Ordinary Least

Squares (OLS) technique. It is in respect of this method that

Gauss – Markov theorem enunciates thus; “the classical Ordinary

Least Squares estimator is the best, linear, unbiased estimator

(BLUE), compared to all other linear unbiased estimators of the

true  in the sense that it is linear, unbiased and has the smallest

variance (Wannacott and Wannacott, 1970).

However, the validity of the estimated model depends upon

its ability to adequately predict the value of the dependent

variable within one sample data used for the estimation. Our

estimated model shall therefore be evaluated and verified to

determine its reliability. We thus; use the three (3) criteria

adopted in the evaluation of the estimates namely;

i) The economic a – priori criteria determined by economic

theory

ii) The statistical criteria determined by statistical theory and

iii) The econometric criteria determined by econometric theory

 In the case of the economic a priori criteria, for the

estimates obtained to be admissible, they must agree in sign and

size in terms of what is theoretically expected. In other words,

the estimates must conform to the stated expected sign and size

as provided by economic theory. If the estimate conflict with

economic theory, the result will be rejected unless there is

sufficient reason to doubt its applicability to the particular

situation.

Also, the estimated model will be evaluated on statistical

grounds using the first order test. It is noteworthy that the

statistical criteria are secondary only to a priori theoretical

criteria. The measures to be used for the statistical test include

the t-statistic, the coefficient of multiple determination or

correlation coefficient (R2) and the F-statistic.

a) The student t-statistic – The t-statistic measures the

reliability of the regression coefficients that is; o, 1, 2---n.

It also measures the degree of confidence and thus helps

the researcher to determine the significance of the

estimates. The student t-ratio for each parameter estimate

for example 1 is computed as follows:

t* = 1 where (S1) is the standard error of 1

s(1)

The calculated t-value (t*) obtained is then compared

with the tabulated value of t which is obtained from the t-

table with n-K degrees of freedom. The theoretical values of

t at a chosen level of significance are the critical values that

define the critical region in the two-tailed test. Note that, n

is the sample size and K is the number of variables in the

model. If t* (calculated t) falls in the acceptance region;

that is; if – t0.025 < t* < t0.025, we accept the null hypothesis

and reject the alternative hypothesis. This means that; the

1 is not significant (at 5% level of significance) and hence

the corresponding regressor/explanatory variable does not

appear to contribute to the explanation of the variations in Y

(the regressand). On the other hand, if t* falls in the critical

region, we reject the null hypothesis and accept the

alternative one; meaning that the 1 is statistically

 significant and the corresponding regressor does contribute

to the explanations of the variations in Y.

b) The Coefficient of multiple determination, (R2) – This test,

indicates how well the model fits the data. It tells us what

particular percentage of variations in Y is explained by the

regressors in the model. The value of R2 lies between O and

1. The higher the R2, the greater the percentage of

variation of Y explained by the regression plane, that is “the

better the goodness of fit” of the regression plane to the

sample observations (Koutsoyiannis, 1977).

R2 is given by the formular,

R2Y, x1, x2 < 1Y1X1 + 2Y2X2

Y12

Where:

1, 2 are all coefficients; X1, X2 are the explanatory

variables; and Y is the dependent variable. However, the R2 does

not take into account the loss of degrees of freedom from the

introduction of additional explanatory variables into the model.

For the adjusted coefficient of multiple determination (R2), it

should be noted that by the inclusion of additional explanatory

variables into the function, we increase the value of the

numerator of the expression R2, while the denominator remains

the same. To correct this defect we adjust R2 by taking into

account the degrees of freedom, which clearly decrease as new

regressors are introduced into the function. The adjusted

coefficient of multiple determination R2 is expressed thus;

R2 = 1 – (1 – R2) n–1

n–K

Where:

R2 = the unadjusted multiple correlation coefficient

n = the number of sample observation

K = the number of parameters estimated from the

above sample.

c) The F-statistic or the F-ratio – This is used to evaluate the

statistical significance of R2 or, put in another way; it is used

to test the overall significance of the regression. The F-

Statistic is expressed as;

 F* = R2 / (K – 1)

(1 – R2) / (n – K)

Where:

K = number of parameters including the

constant term

n = number of observation in the sample

R2 = Coefficient of multiple determination.

If the f* (calculated f) is greater than the tabulated F (Fv1,

v2), we reject the null hypothesis and accept the alternative

one; meaning that the R2 is statistically significant, thus the

whole model. However, if F* < F(v1, v2), we accept the null

hypotheses and reject the alternative one, which means that

the overall regression coefficient is not significant.

Note that;

F(v1, v2), = theoretical or tabulated F-ratio

V1 = K – 1, and V2 = n-K.

Lastly, in the case of the econometric criteria or second

order test, we employ the Durbin – Watson (DW) test to test for

the presence or absence of serial correlation also called

autocorrelation. Autocorrelation exists as a result of the omission

of an important explanatory variable, misspecification of

mathematical form of the model as well as that of the true

random term. This will result to statistical bias of the estimated

parameters (that is, the difference between the expected value of

the estimates and the true value of the estimates).

The DW – statistic is expressed as;

d* = ∑ et - et –1
2

t=2

∑ e 2t

t=1

where; et = present error values

et-1 = previous error values.

The comparison using d1 and du in Durbin-Watson tables

investigates the possibility of positive autocorrelation while

comparison with (4 – dL) and (4 – du) investigates the possibility

of negative autocorrelation.

If d* < dL, we say there is positive autocorrelation of the

first order.

If d* > (4 – dL) then, we say there is negative

autocorrelation of the first order. If then du < d* <(4-du), we say

there is no autocorrelation.

4.3 SOURCES AND METHOD OF DATA COLLECTION

The required secondary data for this study is extracted from

Central Bank of Nigeria publication, such as, CBN statistical

bulletin.

4.4 LIMITATION OF THE STUDY

In the course of writing this research, the researcher

encountered financial problems. It is the investigator/researcher’s

consent that the information used in the research is officially

acceptable. It is the researcher’s obligation to reduce the

magnitude of this problem.

4.4 DATA PRESENTATION AND ANALYSIS

4.4.1 PRESENTATION OF RESULT

AGDP=148558.6 + 11.8046CEA + 51.3307CEA(-1) – 0.6811CEA(-2)

(0.8889) (0.9995) (5.4154) (-0.0606)

+ 34.4383CEA(-3)

(1.8731)

R2=0.8351, F-Statistic = 30.1112, DW = 2.0098.

4.4.2 ANALYSIS OF RESULT

The result presented in section 4.4.1 above shall be

interpreted on the basis of three evaluating criteria, viz: the

Economic apriori criteria, Statistical criteria, and Econometric

criteria.
 (a.) Economic Apriori Criteria:

On apriori grounds, we interpret the signs and magnitude of

the independent variables with respect to the dependent variables

in order to confirm whether or not they conform with economic

theory. From the result presented, all the coefficient of the

explanatory variables except the capital expenditure on

Agriculture lagged two years (CEA-2) conform to economic theory.

Economic theory predicts a positive relationship between

government expenditure and agricultural outputs.

However, the result reveals that one percent increase in CEA

will result in an increase in Agricultural output (AGDP) by 11.7983

percent; one percent increase in CEA-1 will result in an increase in

AGDP by 51.3307 per cent; one percent increase in CEA-2 will

result in a decrease in AGDP, by 0.6811 percent; while one

percent increase in CEA-3 will result in an increase in AGDP by

34.4381 percent.

(b.) Statistical Criteria:

On statistical grounds only the coefficient of Capital Expenditure

on Agriculture lagged one year (CEA-1) is significant that 5 per

cent level of significance, while all the other variables are

statistically insignificant.

The result also reveals that the explanatory variables

explain 83. 5 per cent variation in Agricultural output (AGDP).

This implies that the regression line gives a good fit. The

calculated f-statistic of 30.1112 is greater than the tabulated

value of 2.90 at 0.05 level of significance. Hence, the overall

regression is significant.

(c.) Econometric Criteria:

On econometric grounds the Durbin Watson (DW) Statistic was

used to detect whether or not autocorrelation exists. However, it

was discovered that with the calculated DW statistic value of

2.0098 which lies between du and 4-du i.e, 1.78=du <

d*=2.0098<4-du=2.22, we conclude that there does not exist the

presence of autocorrelation in the model.

4.4.3 DISCUSSION OF RESULT

From the analysis so for interpreted above, we discovered

that Capital Expenditure on Agriculture impacts positively on the

growth of Agriculture in Nigeria though not in the short-run. This

is the reason why the coefficient of CEA was positive though not

significant and was positive and rather significant in the one year

lag. This result is consisted with the economic apriori expectation.

The total variation of the explanatory variables and the f-

statistic reveals also that the model is suitable and could be used

for econometric predications.

 CHAPTER FIVE

SUMMARY, RECOMMENDATIONS AND CONCLUSION

5.1 SUMMARY OF MAJOR FINDINGS

The aim of this study is to examine the impact of

government expenditure on Agricultural outputs in Nigeria from

1984 to 2007. In assessing the impact of government

expenditure on Agriculture outputs in Nigeria by the method of

ordinary least squares (OLS), we observed that:

1. Government expenditure has a positive and significant

relationship with agricultural outputs within a one year lag

but insignificant in all other periods including the immediate

one.

2. The constant term was significant also which indicates that

whether or not government spends money on agricultural

production, agriculture could still strive because of its

relevance to overall growth of the Nigeria economy.

3. The overall result reveals that the model is suitable and

could be adopted as a standard for econometric predictions

5.2 POLICY RECOMMENDATIONS

Based on the results, we make the following

recommendations:

1. The result underpins the fact that government expenditure

on agriculture actually enhances increase in agricultural

outputs in Nigeria, so more emphasis should to placed on

enhancing productivity perhaps through the establishment of

home based industries to cater for the provision of

agricultural inputs such as agro-chemical products and

fertilizers. This will reduce the cost of basic farm inputs and

further increase productivity.

2. Government should increase her spending on agricultural

outputs by also assisting farmers, especially at the rural

communities to boost productivity.

3. The problem of administrative efficiency should be properly

addressed, especially in the area of poor planning and

hazardous execution of agricultural programmes.

 4. The need for the introduction of modern agricultural

technology in Nigeria through mechanized farming should be

encouraged.

5. A strong and viable monitoring team should be set up to

investigate how the cash-flow on agriculture is being

channeled in order to forestall the corrupt practices existing

in the agricultural sector.

5.3 CONCLUSION

The development of a means of achieving high rate of

agricultural growth is very crucial in Nigeria because changes

within the agricultural sector are bound to have a profound

influence on the performance of other sectors of the economy.

Agriculture is also essential for providing food for the fast growing

population, raw materials for industries and above all in

generating revenue to sustain the overall economy, of which

Nigeria should not be an exception.

 However, this work sheds more light on the nature of

government expenditure on agricultural and its effect on

agricultural output in Nigeria. It further reveals that government

expenditure impacts positively on agricultural outputs though not

immediately. It also shows that agriculture must exist irrespective

of the interests of government in boosting this sector of the

economy. On the basis of this, we conclude that with proper

implementation and monitoring of government policies in this

direction, coupled with the combine efforts of the private sector in

boosting agriculture, the Nigerian economy stands a better

chance of developing at a faster pace than usual.

 REFERENCES

Anyanwu, J.C. and Oakenan E. (1997): Modern Macroeconomics:

Theory and Application in Nigerian. Onitsha Jaonee Pub. Ltd.
Anyanwu, J.C. Oyefusi, A. Oaikhenan, H. and Dinow, F.A (1997):
The Structure of the Nigerian Economy (1969-1997). Joanne
Educational Publishers ltd. Onitsha Nigeria.
Balogun E.D. and Out .F. (1991): “Credit Policies and Agricultural
Development in Nigeria”. CBN Economic and Financial
Review Vol.29. No.2, June 1991.
Central Bank of Nigeria Economic and Statistical Review (Various
Issues). Lagos.
Froyen, R.T. (1986): Macroeconomics: Theories and Policies New
York Macmillan Pub. Coy. Ltd.
Keynes, J.M. (1936): The General Theory of Employment,
Interest Rate and Mooney, London. Macmillan Press.
Koutsoyiannis, A. (1977). “Theory of Econometrics”. Second
Edition, Macmillan Press Limited. London
McConnell, C.R and Brue, S.L. (1990): Leasing issues in Economic
Principle, Problems and Policies: London McGraw Hill.
Ojo, M.O (1986): Food Policy Economic Development in Nigeria”
CBN publication Lagos.
Ojo, M.O. (1998): “Agricultural Performance and policy under
Structural Agriculture programme in Nigerian CBN Logos
Reynolds, L.G. (1975): “Agriculture in Development Theory”. Yale
University press, London.
Ukpong, G.E. (1991): An Empirical Study of Factors Affecting
Agricultural Output in Nigeria”. CBN Economic and Financial
Review.
Wannacott, R. and Wannacott, T. (1970). Econometrics. New
 York: Wiley Publishers, 21.

Johnson, B.K. (1967). “Economic Freedom, Foreign Aid and

Economic Development”. Index of Economic Freedom, New
York.
 APPENDIX A

DATA
obs AGDP CEA CEA__1_ CEA__2_ CEA__3_
1981 13580.3 775.1
1982 15905.5 1035.1 775.1
1983 18837.2 1185.2 1035.1 775.1
1984 23799.4 252.5 1185.2 1035.1 775.1
1985 26625.2 985.4 252.5 1185.2 1035.1
1986 27887.5 892.5 985.4 252.5 1185.2
1987 39204.2 365.1 892.5 985.4 252.5
1988 57924.4 595.7 365.1 892.5 985.4
1989 69713 981.5 595.7 365.1 892.5
1990 84344.6 1758.5 981.5 595.7 365.1
1991 97464.1 551.2 1758.5 981.5 595.7
1992 145225.3 763 551.2 1758.5 981.5
1993 231832.7 1820 763 551.2 1758.5
1994 349244.9 2800.1 1820 763 551.2
1995 619806.8 4691.7 2800.1 1820 763
1996 841457.1 3892.8 4691.7 2800.1 1820
1997 953549.4 6247.4 3892.8 4691.7 2800.1
1998 1057584 8876.6 6247.4 3892.8 4691.7
1999 1127693 6912.6 8876.6 6247.4 3892.8
2000 1192910 5761.7 6912.6 8876.6 6247.4
2001 1594896 57879 5761.7 6912.6 8876.6
2002 1883253 32364.4 57879 5761.7 6912.6
2003 2136466 8510.9 32364.4 57879 5761.7
2004 3903759 48047.8 8510.9 32364.4 57879
2005 4752979 79939.4 48047.8 8510.9 32364.4
2006 5940237 15176.8 79939.4 48047.8 8510.9
2007 1673880 22518.6 15176.8 79939.4 48047.8
2008 -2592477 29860.4 22518.6 15176.8 79939.4
2009 -6858834 37202.2 29860.4 22518.6 15176.8
2010 -1.1E+07 44544 37202.2 29860.4 22518.6
2011 -1.5E+07 51885.8 44544 37202.2 29860.4
2012 -2E+07 59227.6 51885.8 44544 37202.2
2013 -2.4E+07 66569.4 59227.6 51885.8 44544
2014 -2.8E+07 73911.2 66569.4 59227.6 51885.8
2015 -3.2E+07 81253 73911.2 66569.4 59227.6
 APPENDIX B

REGRESSION RESULT

Dependent Variable: AGDP

Method: Least Squares
Date: 02/24/11 Time: 10:19
Sample (adjusted): 1984 2015
Included observations: 32 after adjustments

Variable Coefficient Std. Error t-Statistic Prob.

CEA 11.79832 11.80459 0.999469 0.3301

CEA__1_ 51.33074 9.478576 5.415449 0.0000
CEA__2_ -0.681081 11.23696 -0.060611 0.9523
CEA__3_ 34.43827 18.38593 1.873077 0.0765
C 148558.6 167129.3 0.888884 0.3852

R-squared 0.863745 Mean dependent var 1201322.

Adjusted R-squared 0.835060 S.D. dependent var 1587683.
S.E. of regression 644802.0 Akaike info criterion 29.77433
Sum squared resid 7.90E+12 Schwarz criterion 30.01975
Log likelihood -352.2919 F-statistic 30.11122
Durbin-Watson stat 2.009774 Prob(F-statistic) 0.000000