The role of institutional quality in the nexus between agricultural expenditure and agricultural production in Nigeria Online publication date: Wed, 03-Jul-2024
by Isiaka Akande Raifu; Ajibola Fatima Oladejo
International Journal of Sustainable Economy (IJSE), Vol. 16, No. 3, 2024
Abstract: This study examines the moderating role of institutional quality in agricultural expenditure and agricultural output nexus in Nigeria during the period between 1984 and 2018. We compute the institutional quality index from five governance indicators which include government stability, democratic accountability, control of corruption, bureaucratic quality and law and order using principal component analysis. The main analysis is carried out using the autoregressive distributed lag method. The results show that agricultural expenditure positively and significantly impacts agricultural output in the long run. Institutional quality has a positive effect on agricultural output only in the short run. However, we do not find evidence that institutional quality moderates the agricultural expenditure-agricultural output nexus. While the government must ensure consistent support for agricultural production, strengthening the institutional apparatuses must be given priority to guarantee sustainable agricultural production.
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