Post by Trade Coach on Nov 15, 2020 13:14:54 GMT 1
THE EMPERICAL ANALYSIS OF AGRICULTURAL EXPORTS AND ECONOMIC GROWTH IN NIGERIA
Agriculture is the main sector that is expected to provide employment to large segments of the population and the key to sustained economic growth of the countries. Agriculture has been the most important single activity in the Nigerian economy, with about 70% of the total working population engaged in it. It is the largest single sector of the economy, providing employment for a significant segment of the workforce and constituting the mainstay of the Nigeria large rural community which accounts for nearly two-third of the population. The proportion of the Gross Domestic Product (GDP) attributed to agriculture holds between 30 and 40% (CBN, 2009). The favorable climatic condition and vegetation makes Nigeria able to provide crops and livestock.
Generally, the rise of agricultural export has been a considerable success story and one that has brought numerous benefits to Nigeria thus, the importance of export to a nation’s economic growth and development cannot be overemphasized since it is a catalyst necessary in improving our country economic statues. However, exportation of Nigeria Agricultural product indeed as pave way for employments and also a source of foreign exchange because trade transaction among nations are settled in foreign exchange and employment opportunity for the people with the attendant reduction is social costs of unemployment. However, export of agricultural products can make an underdeveloped economy into a prosperous economy in a little while because income earned through exporting will help in increasing the level of demand within the economy. However, Agriculture, the second largest sector after oil, fell from 48% of GDP in 1970 to 20.6% in 1980 and was only 23.3% of GDP in 2005 (CBN, 2009). The duo crisis of food and finance around the world had left agricultural export and economic growth on its lowest ebb in Nigeria
Determinants of economic growth in Nigeria
Factors of production are one of the main economy forces that determine growth. Some of the economic forces are explained as follows;
1. Natural resources: The principal factors affecting growth of an economy is the natural resources or land. “Land” as used in economics includes natural resources such as the fertility of land, its situation and composition, forest wealth, minerals, climate, water resources, sea resources, etc.
2. Capital accumulation: The second important economic factor of economic growth is capital accumulation. Capital means the stock of physical reproduction of factors of production. When the capital stock increases with the passage of time, it is called capital accumulation (or capital formation). Capital formation is essential to meet the requirements of an increasing population in such economies; investment in capital goods not only raises production but also employment opportunities.
3. Organization: Organization is an important part of economic growth process. It relates to the optimum use of factors of production in economic activities, organization is complement to capital and labor and helps in increasing their productivities.
In Nigeria, agricultural export has played a prominent role in economic development by providing the needed foreign exchange earnings for other capital development projects. According to Ekpo (1994) agricultural export commodities contributed well over 75% of total annual merchandise exports in 1960. Nigeria also ranked very high in the production and exportation of some major crops in the world in the 1940s and 1950s.
For instance, Nigeria was the largest exporter of palm oil and palm kernel, ranked second to Ghana in Cocoa and occupied a third position in groundnut. Olayide (1976) observed that Nigeria’s export earnings from major agricultural crops contributed significantly to the Gross Domestic Product (GDP). Similarly, Egwaikhide (1994) observed a long-term relationship between agricultural exports and economic growth in Nigeria.
The empirical review or analysis of agricultural exports and economic growth employed multiple regression analysis to examine the contribution of agricultural sector on the Nigerian economic development. They found that a positive relationship between Gross Domestic Product (GDP) vis-à-vis domestic savings, government expenditure on agriculture and foreign direct investment between the periods of 1986 to 2007. It was also revealed in the study that 81% of the variation in GDP could be explained by domestic savings, government expenditure and foreign direct investment.
Olajide,(2012) analyses the relationship between agricultural resources and economic growth in Nigeria. The ordinary least square regression method was used to analyze the data. The results revealed a positive cause and effect relationship between Gross Domestic Product (GDP) and agricultural output in Nigeria. Agricultural sector is estimated to contribute 34.4% variation in Gross Domestic Product (GDP) between 1970 and 2010 in Nigeria. The agricultural sector suffered neglect during the hey-days of the oil boom in the 1970s. In order to improve agriculture, government should see special incentives are given to farmers, provide adequate funding, and also provide infrastructural facilities such as good roads, pipe borne water and electricity.
Agriculture is the main sector that is expected to provide employment to large segments of the population and the key to sustained economic growth of the countries. Agriculture has been the most important single activity in the Nigerian economy, with about 70% of the total working population engaged in it. It is the largest single sector of the economy, providing employment for a significant segment of the workforce and constituting the mainstay of the Nigeria large rural community which accounts for nearly two-third of the population. The proportion of the Gross Domestic Product (GDP) attributed to agriculture holds between 30 and 40% (CBN, 2009). The favorable climatic condition and vegetation makes Nigeria able to provide crops and livestock.
Generally, the rise of agricultural export has been a considerable success story and one that has brought numerous benefits to Nigeria thus, the importance of export to a nation’s economic growth and development cannot be overemphasized since it is a catalyst necessary in improving our country economic statues. However, exportation of Nigeria Agricultural product indeed as pave way for employments and also a source of foreign exchange because trade transaction among nations are settled in foreign exchange and employment opportunity for the people with the attendant reduction is social costs of unemployment. However, export of agricultural products can make an underdeveloped economy into a prosperous economy in a little while because income earned through exporting will help in increasing the level of demand within the economy. However, Agriculture, the second largest sector after oil, fell from 48% of GDP in 1970 to 20.6% in 1980 and was only 23.3% of GDP in 2005 (CBN, 2009). The duo crisis of food and finance around the world had left agricultural export and economic growth on its lowest ebb in Nigeria
Determinants of economic growth in Nigeria
Factors of production are one of the main economy forces that determine growth. Some of the economic forces are explained as follows;
1. Natural resources: The principal factors affecting growth of an economy is the natural resources or land. “Land” as used in economics includes natural resources such as the fertility of land, its situation and composition, forest wealth, minerals, climate, water resources, sea resources, etc.
2. Capital accumulation: The second important economic factor of economic growth is capital accumulation. Capital means the stock of physical reproduction of factors of production. When the capital stock increases with the passage of time, it is called capital accumulation (or capital formation). Capital formation is essential to meet the requirements of an increasing population in such economies; investment in capital goods not only raises production but also employment opportunities.
3. Organization: Organization is an important part of economic growth process. It relates to the optimum use of factors of production in economic activities, organization is complement to capital and labor and helps in increasing their productivities.
In Nigeria, agricultural export has played a prominent role in economic development by providing the needed foreign exchange earnings for other capital development projects. According to Ekpo (1994) agricultural export commodities contributed well over 75% of total annual merchandise exports in 1960. Nigeria also ranked very high in the production and exportation of some major crops in the world in the 1940s and 1950s.
For instance, Nigeria was the largest exporter of palm oil and palm kernel, ranked second to Ghana in Cocoa and occupied a third position in groundnut. Olayide (1976) observed that Nigeria’s export earnings from major agricultural crops contributed significantly to the Gross Domestic Product (GDP). Similarly, Egwaikhide (1994) observed a long-term relationship between agricultural exports and economic growth in Nigeria.
The empirical review or analysis of agricultural exports and economic growth employed multiple regression analysis to examine the contribution of agricultural sector on the Nigerian economic development. They found that a positive relationship between Gross Domestic Product (GDP) vis-à-vis domestic savings, government expenditure on agriculture and foreign direct investment between the periods of 1986 to 2007. It was also revealed in the study that 81% of the variation in GDP could be explained by domestic savings, government expenditure and foreign direct investment.
Olajide,(2012) analyses the relationship between agricultural resources and economic growth in Nigeria. The ordinary least square regression method was used to analyze the data. The results revealed a positive cause and effect relationship between Gross Domestic Product (GDP) and agricultural output in Nigeria. Agricultural sector is estimated to contribute 34.4% variation in Gross Domestic Product (GDP) between 1970 and 2010 in Nigeria. The agricultural sector suffered neglect during the hey-days of the oil boom in the 1970s. In order to improve agriculture, government should see special incentives are given to farmers, provide adequate funding, and also provide infrastructural facilities such as good roads, pipe borne water and electricity.