Modelling the Effect of Investment on Agricultural Productivity in Ghana

Samuel Yeboah

MPRA Paper from University Library of Munich, Germany

Abstract: Public investment and agricultural sector productivity nexus has been examined in the current paper using the ordinary least squares (OLS), vector error correction model (ECM), and Johansen test in a trivariate model, for the period 1961-2013, using annual time series data, for Ghana. The results indicate that public investment have significant negative effect on agricultural sector productivity (using the OLS test), whereas, investment by enterprises, government and households (measured by gross fixed capital formation) have significant positive effect on agricultural sector productivity. The findings of the Johansen test results indicate stable long run relationship among public investment, gross fixed capital formation, and agricultural sector productivity. The agricultural sector has not benefited from public investment over the period under discussion. The findings of the study seems to suggest that, policy makers in the agricultural sector should not rely on public investment to improve agricultural sector productivity. The findings suggest that investment by enterprises, government and households could be relied on as a policy tool to influence agricultural sector productivity. Other investment variables such as foreign direct investment should be included in future research to examine whether the current findings could be collaborated. Nonlinear models should be examined in future studies to determine if the results will be replicated.

Keywords: Public Investment; Gross Fixed Capital Formation; Agricultural Value Added (search for similar items in EconPapers)
JEL-codes: O16 Q14 (search for similar items in EconPapers)
Date: 2016-04-08
New Economics Papers: this item is included in nep-pke
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