AN EMPIRICAL ANALYSIS OF THE CONTRIBUTIONS OF THE AGRICULTURAL SECTOR TO INDUSTRIAL SECTOR IN NIGERIA

Abstract

This study examines the contribution of the agricultural sector to the industrial sector in Nigeria, using annual time series data from 1990- 2019.  The study specifies industrial output as a function of total labour force, crop production, and forestry production and inflation rate. The Auto Regressive Distributed Lag (ARDL) and Granger Causality Analysis were used for estimating the parameters of the model. The result of the Auto regressive distributed lagged model reveals that crop production (LCPRD) is positive and significantly related to industrial output in the short run(p(t)=0.0041 but insignificant in the long run (p(t)= 0.9944). The relationship between forestry production (LFPRD) and industrial output is positive in the short run(p(t)=0.0162 and long run LFPRD is statistically significant to industrial output in the short run but insignificant in the long run p(t)=- 0.2650. Inflation rate is found to be negative and significantly related to industrial output in the short run. But in the long run inflation rate is statistically insignificant to industrial output p(t)= 0.0895. Labour force (LTLF) is positively related to industrial output but statistically insignificant at 5 per cent in the current in the short run. At lag 2 and 3 labour force is significant. In the long run there is a negative and insignificant relationship between labour force and industrial output in Nigeria. The result of the Granger Causality Analysis reveals that there is a unidirectional causality which runs from crop production, labour force and forestry production to industrial output in Nigeria. The study recommends that government should encourage the production of more agricultural products that could be used as raw materials by industries in order to achieve balanced growth between agricultural and industrial sectors of Nigeria economy.