Investigating The Interaction Between Government Expenditure On Agriculture Sector, FDI Inflow and Agriculture Output In Nigeria

Abstract

This study set out to examine the impact of government expenditure on the agriculture sector performance. The result indicates that government expenditure on the agriculture sector significantly improves the performance of the sector in the period under review. This implies that spending policies of the government on the sector is yielding result as expected. However, commercial bank loan to the sector demonstrates weak positive influence on the agriculture sector output. FDI inflow on the other hand plays anti-growth role in the sector. Thus, the government is advice to adopt expansionary fiscal policy for the sector. The government is further advice to discourage the flow of FDI into the same sector to avoid the stagnation of the sector’s output. Government should mobilize local resources for the sector rather than foreign sources. Monetary policy towards the sector should be strengthened to improve the performance of the sector. Interest rate charged on loan for the purpose of agriculture activities should be lower than other sectors. Commercial banks should be encouraged to increase their participation in providing loan to farmers which will go a long way to boost output.