Modelling the effect of public investment on agricultural productivity in Ghana

Using annual time series data for Ghana, the current study investigates the public investment and agricultural productivity nexus for the period 1961-2013. The empirical assessment is done by using the Johansen test (JT), the Vector Error Correction Model (VECM), and the Ordinary Least Squares (OLS) regression test. The results indicate significant stable long run link between public investment and agricultural productivity in the JT. However, there is insignificant short run link between public investment and agricultural productivity in the VECM. The results of the OLS indicate negative significant link between investment and agricultural productivity. The findings suggest that Public investment has led to a decrease in agricultural productivity. Policy makers should manage public investment very well in order to achieve positive impact on the agricultural sector. The argument in support of public investment in agriculture sector needs to be re-examined as the current findings does not support the debate. Future study should examine the current issue using accounting for causality and structural breaks issues since the present study did not consider these issues.