Agricultural and Manufacturing Sector Outputs and Economic Growth in Nigeria: A Quantile Regression Approach.

Abstract:

Nigeria’s economic development has been persistently hindered by its dependence on crude oil exports, which has exposed the economy to global oil price volatility, macroeconomic instability, high unemployment, and weak industrial growth. This study investigates the contributions of the agricultural and manufacturing sectors to gross domestic product (GDP) and growth in Nigeria, using annual time-series data from 1981 to 2023. Employing a quantile regression approach, the study captures the heterogeneous effects of sectoral outputs across different levels of gross domestic product (GDP), offering insights beyond conventional mean-based methods. The findings reveal that agricultural sector output significantly enhances GDP at the 1% level, underscoring its role in supporting economic diversification. Similarly, manufacturing output exerts a positive and significant influence at the 5% level, affirming its importance in driving structural transformation. In contrast, interest rates exert a negative and significant effect on GDP, indicating that high borrowing costs dampen investment and consumption. Quantile results further show that agricultural output becomes growth-enhancing at the median and upper-middle quantiles, with diminishing effects at the highest quantile. Manufacturing output demonstrates stronger and more significant effects at higher quantiles, suggesting its increasing relevance in advanced stages of economic development. Interest rates remain negatively associated with growth across all quantiles, with the strongest adverse effect observed at the median quantile. The Wald test confirms symmetric relationships across income quantiles. Based on these findings, the study recommends that policymakers prioritize investment incentives, infrastructure development, and credit accessibility for the agricultural and manufacturing sectors.