Public spending mechanisms and gross domestic product (GDP) growth in the agricultural sector (1970–2016): Lessons for Nigeria from agricultural policy progressions in China

Open access

Abstract

China has pursued a sustainable path of development in line with reality for four decades. Economic restructuring started in its vast rural areas, focusing on reforms targeting income increase for rural farmers. These radical sustainable policies that China’s political leaders imbibed were not embraced by Nigeria’s past leaders and these resulted in the bane of underdevelopment. The study examines the level and composition of the drivers of public-spending policy mechanisms that contribute to gross domestic product (GDP) growth in the agricultural sector in China and Nigeria and draws up a model of Chinese development for Nigeria. Secondary data was used and were sourced from FAOSTAT and International Monetary Fund’s Government-Finance Statistics (various issues) from 1970–2016. Random-effects model results revealed that the policy of public-expenditure (PUEXP) and intervention (INTEV) variables were significant but negative, while enterprise-development (ENTDEV), drivers of development (DRIVERS) and Dummy D1t (modest public-expenditure access) were significant and positive for Nigeria. Three variables were significant and positive. The dummies D1t and D2t (macro-economic stability) were positive and significant for China. Public-expenditure and GDP growth has an inverse relationship in Nigeria, but a direct relationship in China. In Nigeria, PUEXP coefficient is ˗0.6810 and 0.8902 for China. Hence, macro-economic stability, enhanced market mechanisms and economic progress resulted in China and hereby lessons are drawn for Nigeria. Public leaders are responsible for governing the market in a manner that induces businesses to produce public value. However, if public-policy mechanisms are not well-designed to fit the economy’s needs it could significantly influence the economy in a negative way, and the society bears the costs.

If the inline PDF is not rendering correctly, you can download the PDF file here.

  • Abu N. and Usman A. (2010). Government Expenditure and Economic Growth in Nigeria 1970-2008: A Disaggregate Analysis. Business and Economics Journal.

  • Agénor R. and Moreno-Dodson B. (2007). “Public Infrastructure and Growth: New Channels and Policy Implications” in Public Expenditure ed. By Maura Francese Daniele Franco and Raffaela Giordano Banca d’Italia (Rome: 2007); and WB Working Paper.

  • Alexiou C. (2009). Government Spending and Economic Growth: Econometric Evidence from the South Eastern Europe (SEE). Journal of Economic and Social Research11(1) 1–16.

  • Alshahrani S. and Alsadiq A. (2014). Economic Growth and Government Spending in Saudi Arabia: an Empirical Investigation. IMF Working Papers14(3) 1.

  • Anisimova E. (2016). Public expenditure in agriculture: trends “black boxes” and more. International food policy research institute (IFPRI) publication.

  • Apata T.G. Folayan A. Campbell O. and Obaisi A. (2013). Public Spending In Agriculture in Nigeria: Ondo State As A Reference of Analysis. Journal of Emergence Issues 6(2) 137-149.

  • Aregbeyen O. and Kolawole B. (2015). Oil revenue public spending and economic growth relationships in Nigeria. J. Sustain. Dev. 8(3) 113-123.

  • Arellano M. and BondS. (1991). “Some Tests of Specification for Panel Data: Monte carlo. Evidence and Application to Employment Equations” Review of Economic Studies 58(2) 277-297.

  • Arndt C. Pauw K. and Thurlow J. (2015). “The Economy-wide Impacts and Risks of Malawi’s Farm Input Subsidy Program.” American Journal of Agricultural Economics 98(3) 962–980.

  • Aparajita G. and John N. (2017). Reaping Richer Returns. Public Spending Priorities for African Agriculture Productivity Growth. A copublication of the Agence Française de Développement and the World Bank.

  • Attari M. and Javed A. (2013). Inflation Economic Growth and Government Expenditure of Pakistan: 1980-2010. Procedia Economics and Finance5 58–67.

  • Barro R. 1990. Government spending in a simple model of endogenous growth’ The Journal of Political Economy 98(5) S103-S125.

  • Barro J. and Sala-I-Martin X. (2003). Economic Growth 2nd. ed. McGraw-Hill New York.

  • Barro R. and Sala-I-Martin X. (1992). “Public finance in models of economic growth” Review of Economic Studies 59 645-661.

  • Bleaney G and Kneller G (2001). “Testing the Endogenous Growth Model: Public Expenditure Taxation and Growth Over the Long Run” Canadian Journal of Economics 32 (3) 450-467.

  • Bose-Niloy M. Emranul H. and Denise R. Osborn (2017). “Public Expenditure and Economic Growth: A Disaggregated Analysis for Developing Countries” Manchester School 75 533-561.

  • Calhoun C. and Wasserstrom J. (2003). “The Cultural Revolution and the Democracy Movement of 1989: Complexity in Historical Connections” in Law Kam-yee The Chinese cultural revolution reconsidered: beyond purge and holocaust Palgrave Macmillan p. 247 ISBN 978-0-333-73835-1 retrieved 2011-10-20.

  • Calderón C. Easterly W. and Servén L. (2004). “Latin America’s Infrastructure in the Era of Macroeconomic Crises” Chapter 2 in The Limits of Stabilization: Infrastructure Public Deficits and Growth in Latin America World Bank (Washington DC: 2004).

  • Coady D. and Fan S. (2008). Public Expenditures Growth and Poverty. Lessons from Developing Countries. The Johns Hopkins University Press

  • Dahlman C. Aubert J. and Eric C. (2008). China and the knowledge economy: Seizing the 21st century. WBI Development Studies. World Bank Publication. Accessed May20th 2018

  • Eboh E. Oduh M. And Ujah O. (2012). Drivers and Sustainability of Agricultural Growth in Nigeria. African Institute for Applied Economics AIAE Research Paper 8. Published by AIAE Independence Layout P.O. Box 2147 Enugu NIGERIA.

  • Emerenini F. M. and Ihugba O.A. (2014). “Nigerians total government expenditure: its relationship with economic growth (1980-2012)” Mediterranean Journal of Social Sciences 5(17) 36-47.

  • Eze C. Lemchi J. Ugochukwu A. Eze V. Awulonu O. and Okon X. (2010). Agricultural financing policies and rural development in Nigeria: The 84th Annual Conference of the Agricultural Economics Society Edinburgh 29th to 31st March 2010.

  • Fan S. Yu B. and Saurkar A. (2008). Public spending in developing countries: Trends composition and changes. In Public Expenditure Growth and Poverty in Developing Countries: Issues Methods and Findings. Johns Hopkins University Press.

  • Fei J. and Ranis G. (1964). Development of the Labour Surplus Economy: Theory and Policy Homewood Illinois: Richard A Irwin inc 97.

  • Ghura D. (1995). “Macro policies external forces and economic growth in Sub-Saharan Africa” Economic Development and Cultural Change 43(4) 759-78.

  • Guseh J.S. (1997). Government Size and Economic Growth in Developing Countries: A Political-Economy Framework. Journal of Macroeconomics 19(1) 175–192.

  • Hausman J.A. (1978). ‘Specification tests in econometrics’ Econometrical 46 1251–1271.

  • Hartwich F. Kormawa P. Ibrahim D. Bisallah B. Odufote B. and Polycarp I.M. (2010). Unleashing Agricultural Development in Nigeria through Value Chain Financing. Draft Report September 2010. UNIDO; CBN and Bank of Industry Nigeria.

  • Henderson D. and Parmeter C. (2015). Applied Nonparametric Econometrics. Cambridge University Press.

  • Herston A. (2008). “China and Development economics” in Brandt Loren; Rawski G. Thomas China’s Great Transformation Cambridge: Cambridge university press

  • Hsieh E. and Lai K. (1994). Government Spending and Economic Growth: The G-7 Experience. Journal of Applied Economics 26 535–542.

  • Huang J. (2008). “Agriculture in China’s Development: Past Disappointments Recent Successes and Future Challenges” in Brandt Loren; Rawski G. Thomas China’s Great Transformation Cambridge: Cambridge university press.

  • Karamba R. and Winters P. (2015). “Gender and Agricultural Productivity: Implications of the Farm Input Subsidy Program in Malawi.” Agricultural Economics 46(3) 357–74.

  • Kareem R. Bakare H. Ademoyewa G. Ologunla S. and Arije A.R. (2015). Nexus between Federal Government Spending on Agriculture Agricultural Output Response and Economic Growth of Nigeria (1979-2013). American Journal of Business Economics and Management3(6) 359–366.

  • Keyuan Z. (2003). “Why China’s Rampant Corruption cannot be checked by laws alone.” In Wang Gungwu and Zheng Yongnian (eds.) Damage Control: The Chinese Communist Party in the Jiang Zemin Era. Singapore: Eastern Universities Press Chapter 3 81-97.

  • Knoop T. (1999). Growth welfare and the size of government” Journal of Economic Inquiry 37(1) 103-119.

  • Lélé S.M. (1991). “Sustainable Development: A Critical Review. ”World Development 19 607–621.

  • Loizides J. and Vamvoukas G.E.V. (2005). Government Expenditure and Economic Growth: Evidence from Trivariate Causality Testing. Journal of Applied Economics8(1) 125–152.

  • Makhtar D. (2017). Efficiency of Public Spending will Enhance Agriculture Productivity for Poverty Reduction in Africa. World Bank publication.

  • Manyong V. Ikpi A. Olayemi J. Yusuf S. Omonona Okoruwa V. and Idachaba. F.S. (2005). Agriculture in Nigeria: Identifying opportunities for increased commercialization and investment. International Institute of Tropical Agriculture (IITA) Ibadan Nigeria.

  • Marta P. Santiago P. Daniela C. (2017). Government expenditure and economic growth in the European Union countries: New evidence Bulletin of Geography. Socio–economic Series 36 127–133.

  • Mogues T. Morris M. Freinkman L Adubi A. Ehui S. Nwoko C. Taiwo O. Nege C. Okonji P. and Chete L. (2008). Agricultural Public Spending in Nigeria. IFPRI Discussion Paper 00789 September 2008.

  • National Bureau of Statistics of China (NBS China) (2016). China Statistical Yearbook (1985-2016) Beijing China Statistics Press.

  • Statistical Communiqué of the People’s Republic of China on the National Economic and Social Development in 2012 (available at http://news.xinhuanet.com/politics/2013-02/23/c_114772758.htm last accessed April 2013).

  • Nkonya E. Pender J. Kato E. Oni O. Phillips D. and Ehui S. (2010). Options for enhancing Agricultural productivity in Nigeria. NSSP 11. Abuja International Food Policy Research Institute (IFPRI).

  • Nurudeen and Usman A. (2010). Government Expenditure and Economic Growth in Nigeria 1970-2008: A Disaggregated Analysis. Department of Economics University of Abuja PMB 117 Nigeria.

  • Ojiako F. Chianu F. Johm K. and Ojukwu C. (2016). Drivers of human capital development: an analysis of primary and secondary education outcomes in Nigeria. International journal of current research 8(6) 3285-3229.

  • Perkins D. (2008). “Forecasting China’s growth to 2025” in Brandt Loren; Rawski G. Thomas China’s Great Transformation Cambridge: Cambridge university press.

  • PhamT. (2010). Government expenditure and economic growth: evidence for Singapore Hong Kong China and Malaysia. International Bachelor Economics and Business Economics Erasmus University Rotterdam 2008/2009.105pp.

  • Quah S.T. (2009). Combating corruption in the Asia-pacific Countries: what do we know and what needs to be done? International Public Management Review · electronic Journal 10(1) International Public Management Network. at http://www.ipmr.net

  • Rajkumar A. and Swaroop V. (2008). “Public Spending and Outcomes: Does Governance Matter?” Journal of Development Economics 86 96–111.

  • Ram R. (1986). Government Size and Economic Growth: A New Framework and some Evidence from Cross-Section and Time-Series data In: American Economic Review 76 191-203.

  • Samson B.A. (2012). Econometrics Analysis of the Contribution of the contribution of the economic sectors to The Gross Domestic Product (GDP). A project submitted to the department of statistics faculty of science University of Ibadan pages 41.

  • Sanusi L. (2010). Growth Prospects for the Nigerian Economy. Paper presented at the eight convocation lecture of Igbinedion University Okada Edo State Nigeria November 20 37.

  • Sauer J Davidova S. and Gorton M. (2012). Land fragmentation market integration and farm efficiency: empirical evidence from Kosovo. Contributed Paper prepared for presentation at the 86th Annual Conference of the Agricultural Economics Society University of Warwick United Kingdom 16 - 18 April 2012.

  • Sharma S. D. 2007). “China’s Economic Transformation”. Global Dialogue 9(1–2).

  • Takeshima H. and Liverpool-Tasie L. (2015). “Fertilizer Subsidies Political Influence and Local Food Prices in Sub-Saharan Africa: Evidence from Nigeria.” Food Policy 54 11–24.

  • United Nations Development Programme (UNDP). (1999). Fighting Corruption to Improve Governance. New York: Management Development and Governance Division UNDP.

  • Wagner A. 1893. “Grundlegung der politischen okonomie (3rd ed.)” Leipzig: C. F. Winter.

  • World Bank. (2007). Nigeria-A fiscal agenda for change: Public expenditure management and Financial accountability review. Poverty Reduction and Economic Management Africa Region World Bank Washington D.C.

  • World Bank. (2010). Poverty Reduction and Economic Management Network (PREM) April 2010 Number 9: Agriculture Public Spending and Growth: The Example of China.

  • Wu S.-Y. Tang J.-H. and Lin E.S. (2010). The Impact of Government Expenditure on Economic Growth: How Sensitive to the Level of Development? Journal of Policy Modeling32(6) 254-263

  • Xin Zhao H. and Russell W. (2008). “Politicizing Consumer Culture: Advertising’s Appropriation of Political Ideology in China’s Social Transition” Journal of Consumer Research (2008) 35(2) 231-244.

  • Yasin M. (2000. Public Spending and Economic Growth: Empirical Investigation of Sub-Saharan Africa. Southwestern Economic Review4(1) 59–68.

  • Zhang X. And Fan S. (2004). “Public Investment and Regional Inequality in Rural China.” Agricultural Economics 30(2) 89–100.

  • Zhng T. and Zou H. (1998). Fiscal Decentralization Public Spending and Economic Growth in China. Journal of Public Economics67(2) 221–240.

  • Zimcík P. 2016. Economic Growth and budget constraints: EU countries panel data analysis. Issue 2/2016. In: Review of Economic Perspectives 2 87-101.

Search
Journal information
Impact Factor


CiteScore 2018: 1.11

SCImago Journal Rank (SJR) 2018: 0.218
Source Normalized Impact per Paper (SNIP) 2018: 0.591

Metrics
All Time Past Year Past 30 Days
Abstract Views 0 0 0
Full Text Views 376 376 61
PDF Downloads 102 102 11