Effect of Agricultural Price Volatility and Investment on the Economic Growth Of Nigeria: A Case of Cocoa Production (1981-2013)

Samuel Olabode and Adedeji Ogunrinola

MPRA Paper from University Library of Munich, Germany

Abstract: One of the crucial factors of production identified in the production process is labour force. Its potential to enhance output growth is dependent on the level of capital investment by the public and private sectors. However, the major challenge facing policy makers is how to allocate limited resources across the range of preferences with an aim of reducing the level of poverty and unemployment, enhance economic growth vis-à-vis capital and recurrent expenditures in agriculture. The study therefore examines the relationship between agriculture expenditure and prices of agricultural commodities in Nigeria (i.e cocoa production). The Solow growth model was adopted and the analysis was based on time series data from 1981-2013. The OLS result showed that there exists a negative relationship between government capital and recurrent expenditures and price of cocoa on the level of Gross Domestic Product (GDP) in the short-run but showed a positive relationship in the long-run. However, the study recommended that the Nigerian government should pay attention to private sector investments in agriculture and improve regulations on pricing of agricultural commodities in Nigeria. The study recommended that government’s attention is required in the sector as a whole.

Keywords: Investment; Price Volatility; Economic Growth (search for similar items in EconPapers)
JEL-codes: E2 E22 O4 O40 Q11 Q17 Q18 (search for similar items in EconPapers)
Date: 2018, Revised 2019
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