Revisiting the economic growth and agriculture nexus in Nigeria: Evidence from asymmetric cointegration and frequency domain causality approaches

• Published date: 01 February 2022
• Author: Mary Oluwatoyin Agboola,Festus Victor Bekun,Olawumi Abeni Osundina,Dervis Kirikkaleli
• Date: 01 February 2022
• DOI: http://doi.org/10.1002/pa.2271

ACADEMIC PAPER

Revisiting the economic growth and agriculture nexus in

Nigeria: Evidence from asymmetric cointegration and

frequency domain causality approaches

Mary Oluwatoyin Agboola

1

| Festus Victor Bekun

2,3

| Olawumi Abeni Osundina

4,5

|

Dervis Kirikkaleli

6

1

Dar Al Uloom University, Riyadh, Saudi Arabia

2

Faculty of Economics Administrative and

Social sciences, Istanbul Gelisim University,

Istanbul, Turkey

3

Department of Accounting, Analysis and

Audit School of Economics and Management,

South Ural State University, Chelyabinsk,

Russia

4

Department of Economics, Babcock

University, Ilishan-Remo, Nigeria

5

Department of Economics, Eastern

Mediterranean University, Famagusta, Turkey

6

Faculty of Economic and Administrative

Sciences, Department of Banking and Finance,

European University of Lefke, Mersin, Turkey

Correspondence

Dervis Kirikkaleli, Faculty of Economic and

Administrative Sciences, Department of

Banking and Finance, European University of

Lefke, Lefke, Northern Cyprus, TR-10 Mersin,

Turkey.

Email: dkirikkaleli@eul.edu.tr

The contribution of different agricultural subsectors to economic growth in Nigeria is

investigated and further suggests policy implications for investing in each of these

subsectors. To this end, Johansen cointegration test and Gregory–Hansen test for

cointegration with regime shift, vector error correction model (VECM), dynamic ordi-

nary least squares (DOLS), fully modified ordinary least squares (FMOLS), Granger

causality, and frequency domain causality test are employed for data from 1981 to

2016. This paper further highlights the long and causal dynamics between the

selected agricultural subsector, namely forestry, crop production, fishery and live-

stock, and economic growth. Findings from time and frequency domain causality

tests indicate a one-way causality running from various subsectors of agriculture to

economic growth in Nigeria, meaning how various subsectors of agriculture are

important for predicting economic growth. In addition, there is 54% speed of adjust-

ment from the error correction model, suggesting a need for diversification of the

economy into the agricultural sector as a means for sustainable economic growth in

the face of the continuous plunge in the global oil price. In the long-run, the effect of

forestry, crop production, and fishery on economic growth is statistically significant

and positive. These outcomes have inherent policy implication(s), which are eluci-

dated in the concluding section.

JEL CLASSIFICATION

O13; Q32; Q33

1|INTRODUCTION

The challenges faced by humankind have not greatly changed; they are still

anchored on the three major basic needs of life: shelter, clothing, and food.

Ensuring the basic level of food security has continually been a challe nge

within African countries, of which Nigeria is not an exception. Nigeria is

reputed as Africa's most populous country with a huge population of over

170 million people. Unfortunately, most of its citizens have access to less

than the minimum daily calorie requirement, due to living on less than the

minimum required two dollars per day. To escape this food insufficiency, it

is important for the country to look inward to achieve sustained food secu-

rity; and to do that the agricultural sector needs to be revamped.

Economic growth is the heartbeat of economic development in

any country and is measured via the growth rate of a country's

national income; a higher national income should translate to higher

benefits for the citizens. Despite the significance of agriculture to eco-

nomic growth, there are two opposing schools of thought about the

relationship between agriculture and economic growth. Some have

argued that agriculture should be the bedrock of economic growth

(Alola & Alola, 2018; Gollin, Parente, & Rogerson, 2002; Lawal, 2011;

Mishra & Dash, 2014; Odetola & Etumnu, 2013; Oluwatoyese &

Applanaidu, 2014; Thirtle, Lin, & Piesse, 2003; Timmer, 1995); in con-

trast, Jorgenson (1961), Ranis and Fei (1961), Dercon (2009) and

Gollin (2010) maintain that the causal relationship between agriculture

Received: 2 April 2020 Revised: 3 June 2020 Accepted: 5 July 2020

DOI: 10.1002/pa.2271

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https://doi.org/10.1002/pa.2271