Effect of Government Agricultural Expenditure on Agricultural Productivity Growth in ECOWAS (1980-2022)

Abstract

Investing in agriculture is one of the most effective strategies for enhancing living standards and alleviating poverty in ECOWAS. However, establishing and maintaining sustainable and efficient production systems in agriculture demands significant capital investment in order to enhance agricultural competitiveness through creating larger markets, and reducing trade barriers within ECOWAS. This study therefore examined the effect of government agricultural expenditure on agricultural productivity growth in the Economic Community of West African States (ECOWAS) from 1980 to 2022. Using panel data and the Autoregressive Distributed Lag (ARDL) model, the research examined both the short-run and long run relationships between government agricultural expenditure and agricultural productivity growth among 12 ECOWAS member states.  The study revealed that agricultural labour force participation (ALFP) experienced serious fluctuations; while government agricultural expenditure (GAE) and gross capital formation (GCF) experienced rapid increases; moreover exchange rate consistently experienced an upward trend; but food aid experienced a consistent decline and downward movement; while inflation rate also recorded an upward trend within the reference period.  The results of the Panel ARDL revealed that, in the short-run both Agricultural Gross Domestic Product and Gross Capital Formation had a negatively significant effect on Agricultural Total Factor Productivity Growth. Likewise, in the long-run, Government Agricultural Expenditure, Gross capital formation, Food aid and Political stability all had a negatively significant effect on Agricultural Total Factor Productivity Growth in ECOWAS, while  Agricultural Labour Force Participation, Inflation Rate had a positive and significant effect on Agricultural Productivity Growth. The study recommends the need for ECOWAS member states to invest in agricultural investment and infrastructure development, work towards currency stability and inflation management. There is also the need to implement policies to cater for a competitive exchange rate, moderate inflation rates, and political stability, promotion of a conducive environment to promote investment for agricultural growth, integrate food aid with local capacity-building efforts, and support agricultural infrastructure, inputs, and resilience.