Impact of Agriculture and Industrialization on GDP in Nigeria: Evidence from VAR and SVAR Models

Abstract

Agriculture and industrialization has been generally accepted as the surest and most direct route to economic development of any country like Nigeria. Their potentials, if properly harnessed, has the capacity to grow a Nation income. In this paper, we investigated the impact of agriculture and industry on GDP in Nigeria. To achieve this, we employed the log transform data on Agriculture, industry and GDP from 1960 to 2011 extracted from the CBN website. The ADF test for stationarity was carried out for GDP, agriculture and industry, the result revealed stationarity of the series at 1% level of significance. Thereafter we model the time series using VAR and SVAR models. The results from the VAR model revealed that agriculture contributed about 58% to GDP while industry contributed about 32% to GDP in Nigeria. The study further revealed from the SVAR models that agriculture and industry contributed to the structural innovations of GDP in Nigeria but more contribution resulting from agriculture. The work therefore recommended that special incentive should be given to farmer and infrastructural facilities should be provided. While new approaches should be vigorously and honestly pursued by the Nigerian government in order to restore the glory of the industrial sector in Nigeria.