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

Author

Listed:
  • Olabode, Samuel
  • Ogunrinola, Adedeji

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.

Suggested Citation

  • Olabode, Samuel & Ogunrinola, Adedeji, 2018. "Effect of Agricultural Price Volatility and Investment on the Economic Growth Of Nigeria: A Case of Cocoa Production (1981-2013)," MPRA Paper 100572, University Library of Munich, Germany, revised 2019.
    • Handle: RePEc:pra:mprapa:100572
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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