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Abstract

The study investigated the contribution of agricultural sector output to the growth of domestic economy in Nigeria for the period 1990-2017. The study examined the impact of agricultural output and economic growth, as well as to determine the response to shocks in the variable under studied. Cointegration test, Vector Error Correction Model (VECM) and variance decomposition test were utilized in the analysis. The variables employed in the investigation include real gross domestic product (RGDP), agricultural output (AGRIC), gross capital formation (GCF, exchange rate (EXC) and interest rate (INT.RATE). A stationarity test was conducted through the application of the Augmented Dickey-Fuller (ADF) stationarity test and the result showed that all the variables were stationary at I(I) and 2(I0). The cointegration result indicated long run equilibrium relationship among the variables under study. The VECM result on the other hand, showed that value of agricultural output has positive and insignificant contribution to GDP. Thus, it is estimated on average that 1% increase in the value of agricultural output would lead to a little increase in real GDP. The study recommends that government should increase its budgetary allocation on agriculture in order to boost the growth performance of the sector. The study also recommend that government should strengthen agricultural credit agencies to enable them monitor and ensure efficient disbursement of fund disbursed to agricultural producers in the country. In so doing, diversion and mismanagement of agricultural sector fund in Nigeria would be discouraged, hence, agricultural output would improve.