Effect of Non-Oil Sector Trade on Economic Growth in Nigeria : Evidence from Agriculture and Mining Sector
International Journal of Humanities, Art and Social Studies (IJHAS), 03 (03):
65-77 (August 2018)Abstract
The study examines the role of non-oil sector trade (agriculture and mining) on economic growth in Nigeria using annual data covering the period of 1970 to 2016. The study applied Multivariate Vector Error Correction Approach, Cointegration and Granger causality test in the analysis. The results from the unit root tests indicates all the variables to be integrated of order one I(1). Johansen cointegration test shows the presence of long-run economic relationship among the variables. The VECM results reveals Real Gross Domestic Product (RGDP) is positively relate to agricultural sector productivity, agricultural sector export, mining sector productivity, mining sector export and exchange rate. All the variables were found to be statistically significant in both the short run and the long run except for exchange rate which is statistically insignificant in both the periods. Granger causality test shows bidirectional causality relationship between RGDP and Agricultural Sector Export, RGDP and Mining Sector Export. It further reveals unidirectional causality relationship between RGDP, Agricultural Sector Productivity and Mining Sector Productivity i.e. both ASP and MSP granger cause RGDP in Nigeria. The study recommends
government should redesign and improve the existing policies so as to optimize the growth of non-oil sector with special focus on agriculture and mining, this will fascinate investment from private and foreign investors, which will in turn improve productivity and exports, so as to provide alternative source of government revenue and employment opportunities in order to withstand fluctuations of oil price shocks in the future.