ABSTRACT
This research work critically focused on the roles of government
expenditure in the agricultural production in Nigeria for the period
1970 to 2010. Data on relevant variables were collected from the
statistics Bulletin of the Central Bank of Nigeria. A functional
relationship between Agricultural output and other explanatory
variables, of which government expenditure is one, was specified and
estimated using the OLS method and multiple regression analysis. It was
found that adjusted R2 for the relationship was 85% and also that
government expenditure has played a positive role in the development of
the agricultural sector. Other major findings made were that the rate of
inflation was very low throughout the period and did not cause much
impact with regards to low productivity. The amount of rainfall during
the period was very low and does not have any significant effect on
agricultural output. Another observation was that the rising prices of
agricultural products brought about increase in the performance of the
sector, as more people were attracted to it. Again, low interest rate
was an encouragement for investors to invest more on agricultural
product.
TABLE OF CONTENTS
PAGES
Title page i
Certification ii
Dedication iii
Acknowledgement iv
Abstract vi
Table of Contents viii
CHAPTER ONE
1.0 Introduction 1
Background of the Study 1
Objectives of the Study 5
Statement of the study 6
Significance of the Study 8
Scope of Study 8
Statement of Hypotheses 9
Limitation of Study 9
Definition of terms 9
CHAPTER TWO
2.0 Literature Review 13
2.1 Conceptual Issues 13
Determinants of Public Expenditure 19
Government Expenditure and Agricultural
Development in Nigeria 22
Government Agricultural Policies and
Programme in Nigeria 30
Theoretical Literature 42
2.2.1 The Theory of Production 42
The Classical Economists view of the theory
of production 45
2.2.3 The view of Neo-Classical Economists 46
2.2.4 The Monetarist Theory 48
2.2.5 Peacok and Wise man Theory of Expenditure 50
2.2.6 Welfare theory of Pigon and Daltion 53
Wagner’s Hypothesis: The Law of increasing
State Activities (1835 – 1917). 54
Methodological Issues 55
Empirical Literature 58
CHAPTER THREE
3.1 Research Methodology and Data Sources 68
3.2 Research Design 68
Source of Data and Limitations 69
Data Analysis Technique 69
Model Formation and Specification 70
CHAPTER FOUR
4.0 Data Presentation, analysis and Interpretation 78
4.1 Analysis of Results 78
4.2 Economics Test 79
4.3 Statistical Test 82
4.4 The F-Test 82
4.5 The Econometric Test 83
4.6 Policy Implications of Result 83
CHAPTER FIVE
FINDINGS, CONCLUSION AND RECOMMENATIONS
5.1 Findings 88
5.2 Recommendations 90
5.3 Conclusion 92
Area for Further Research 93
Bibliography 96
CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The socio-economic development of any
nation is usually dependent on many factors, which combine to ensure the
successful attainment of set development goals. One of such factors is
agriculture. Its discovery dates back to 800 BC period regarded as the
new Stone Age, when man began to till soil and grow crops using crude
implements made out of stone (Anderson, 1995). According to Maslow,
1954, food is one of the physiological needs of man, which must be
satisfied before other needs could be attained. Supporting Maslow’s
assertion, Morgan and Henson (1085) argue that agriculture will remain
an indispensable factor until the end of human existence.
The importance of agriculture in the socio-economic development of every
nation has made many countries of the world (i.e. developed and
developing) to place more emphasis on its development. This is evident
in the number of programmes that have been introduced by both
international agencies and individual countries to ensure improvement in
agricultural activities. In Nigeria for instance, successive
governments have introduced and implemented programmes in this regard.
Such programmes include Operation Feed the Nation (O.F.N.), Agricultural
Research Policy, Agricultural Development Project, Agricultural Credit
Government Scheme, The Green Revolution, River Basin Development
Authorities (RBDA), National Agriculture Land Development, Nigeria
Agricultural and Co-operative Bank (NACB), The Structural Adjustment
Programme (SAP), Directorate of Food, Roads and rural Infrastructure
(DFRRI), (Anyanwu, 1960-1997). It is however, disheartening that despite
the laudable nature of these programmes and the huge financial resource
expended on them, their impact on the economy remains as infinitesimal.
However, the problem, which the Nigeria agricultural sector suffers till
date, could be traced to the discovery of crude oil. The discovery of
crude oil deposit in various parts of the country in commercial
quantities in mid 1960’s coupled with the oil boom of 1974 as a result
of the America, affected adversely the agricultural sector. The economy
therefore, became heavily dependent on oil. For instance, oil sector
provides 20% of GDP, 95% of foreign exchange earnings, about 85% of
total export and 65% of budgetary revenue (Anyanwu, 1997).
Agricultural contributions to the economy were instrumental in
sustaining economic growth and stability, stable growth in agricultural
exports was the backbone of favourable balance of trade. Primary
processing of raw materials from the agricultural sector hence helped in
the sectors through the imposition of taxes and accumulation of
marketing surpluses, which were used to finance many development
project.
Agricultural sector notwithstanding is more else degenerating to a type
of peasant agriculture, which is caught in vicious cycle of poverty
where destination caused by low income, and disguised employment lends
to poor saving and little investment in technology. This therefore,
calls for the attention of the government for the development of the
sector. The development of agricultural sector is one of the crucial
requirement for moving the economy forward. This study therefore, tends
to investigate government expenditure on agricultural production in
Nigeria and how to increase its productivity and role in the economy.
OBJECTIVE OF THE STUDY
The broad objective of this study is to analyze the relationship between
government expenditure and agricultural production in Nigeria, the
specific:
To identify the problem of agricultural financing in Nigeria.
Proffer policy recommendations on how to improve agricultural sector in Nigeria.
To determine the effectiveness of government expenditure on agricultural production in the Nigeria economy.
STATEMENT OF PROBLEM
In recent years, especially since the inception of the present
democratic government in Nigeria, the agricultural sector of the economy
has continued to perform below expectation despite the huge sums of
money being allocated to the sector in each year’s budget. In 2002,
about N9.874 billion was mapped out for the sector. In the same 2002,
over 72 million dollars donated by Food Agricultural Organization (FAO)
was distributed to the 36 states of the federation in addition to that
year’s allocation. According to Iheagu (2002) the money cannot be said
to have a justifiable use. Rather, what one sees is the prevalent “Lack
Luster” attitude of government to the total execution of the programme.
He said that every thing is one side with increasing number of jobless
youths roaming about. He also pointed out that across the state of the
federation, warning signals are booming on the possibility of a butcher
National Food Security programme, which may result in a situation
similar to what are being continued on daily basis by price of food item
in the market and the crude system of farming being practiced in the
country. The situation raises questions as to the effectiveness of the
various agricultural programmes in the country, thereby making it
necessary and imperative to examine the effectiveness of government
expenditure on agricultural production in the Nigeria economy.
SIGNIFICANCE OF THE STUDY
The study is significant because it will help resolve the issue of the
need for the federal government to finance and boast the sector and
provide agencies for monitoring and maintenance of policies periodically
for significant growth and development of the economy. Also, it will
help resolve the serious attention as well as raw materials for infant
industries in the country.
SCOPE OF STUDY
This study is designed to assess the impact of government expenditure on
agricultural development in Nigeria (1970 – 2010). This study will also
examine the performance made by agriculture to the development of the
economy over the years as stipulated above.
STATEMENT OF HYPOTHESES
Ho: Government expenditure in agricultural sector will not lead to agricultural development in Nigeria.
VS
Hi: Government expenditure in agricultural sector will lead to agricultural development in Nigeria.
1.7 LIMITATION OF STUDY
This work did not go all that economy, the problem of the allocation of
time between the research study and other academic work was a serious
limitation because the two activities went on simultaneously. Another
major limitation was the one due to financial constraints to fund all
the aspects of the work.
DEFINITION OF TERMS
Some of the terms that will be used due to their involvement are as follows:
AGRICULTURE: This is used in this study, as the cultivation of land
resources, raising and rearing of animals for the purpose of food, feed
and raw materials production for man, animal and industrial use
respectively.
FARMER: This literally serves as a collective designation given to those
who found themselves in the agricultural field either as cultivation or
harvesters.
INDUSTRY: This as used refers to the various institutions engaged in the
production of either secondary or final goods for economic purpose,
using agricultural output.
BOOM: This simply means sudden increase in trade activities especially when money is being made quickly.
PRODUCTION: This is the act of making goods and services available to the public.