A Critical Empirical Analysis of Causal Linkage between Agricultural Output and Real GDP: Evidence from Nigeria

The agricultural sector is pivotal in poverty alleviation, job creation and food supply. The lingering
quest for global growth and development could be achieved or forfeited in agriculture. In recent times
the performance of the sector leaves more to be desired as its proportion in aggregate output
fluctuated as output expands. This study empirically analyzed the causal linkage between the
agricultural sector output and economic growth in Nigeria using annualized time series data covering
1981 to 2018. Data were analyzed using the Granger causality test, vector autoregression, and
impulse response and variance decomposition econometric tools. The empirical results indicate that
agricultural output did not perfectly interlink with economic growth. The causality test revealed that
economic growth precedes agricultural sector output in a unidirectional manner. At the same time, the
impulse response analysis indicated that economic growth does not respond swiftly to innovations in
agriculture. The findings of our study did not corroborate the predictions of agriculture-led growth
theorized by Kuznets (1968). The policy implications from such research would be profound,
especially in this current state of the economy that requires optimization in resource allocation to
sectors that have the potential to drive growth in other sectors.