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INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS
JUNE 2011
VOL 3, NO 2
this inverse relationship implies that a heavily indebted country like Nigeria could not improve
the agricultural output and hence it has adverse effect on the growth of the Nigerian economy. It
is significant at 1per cent level and this shows that external debt is relevant in explaining inverse
relationship of agricultural output in Nigeria. This relationship in the result is in line with the a
priori expectation stated in chapter three. The coefficient of debt service payment in the current
year is 0.96474. This signifies that there is a direct relationship between agricultural output and
debt service payments. In the current year, the improvement in the debt service payments of the
country enhanced agricultural output and hence it impacted positively on the growth of the
Nigerian economy. The coefficient of debt service payments in the previous year which is -
3.3169 shows that there is an inverse relationship between agricultural output and debt service
payment. This is because a large proportion of the country’s GDP is spent on the debt service
payments and hence it fails to improve the level of agricultural output in Nigeria. The negative
implication of the debt service payments on agricultural sector impacted a negative economic
growth on the economy. It is significant at 1per cent level and this shows a strong inverse
relationship between debt service payment and agricultural output. The coefficient of
government expenditure which is -0.031684 in the current year indicates that there is an inverse
relationship between agricultural output and government expenditure. This inverse relationship
implies that government wasted the meager resources on unproductive investment and hence it
impacted negatively on the growth of the economy. It is significant at 10per cent level and this
shows a weak relationship between agricultural output and government expenditure. The
coefficient of government expenditure in the previous year is -0.34774 and this implies that there
is an inverse relationship between agricultural output and government expenditure. This inverse
relationship bore down on the wreck less spending of the government on investment that are not
of interest to the country. The wreck less spending did not increase the level of agricultural
output and hence it impacted negatively on the growth of the economy. This implies that the
loans obtained by government to revamp agricultural sector crowds out government activities in
Nigeria.
MODEL 2
Table 6 (see appendix) provides data for the short-run error correction coefficient
estimates in model II. From the short-run error correction results, the value of R 2 is 0.46891. This
indicates that over 47per cent variation of the manufacturing output is explained by the error
correction model. The goodness of fit is not quite good because of the low percentage of
manufacturing output in Nigeria.
The coefficient of external debt, is 0.020208 indicates that there is a direct relationship
between manufacturing output and external debt. This direct relationship means that
improvement in the management of the external debt of Nigeria increases the level of
manufacturing output, which impact positively on the growth of the economy. The coefficient of
debt service payment is -0.012961. This shows that there is an inverse relationship between
manufacturing output and debt service payments. The negative relationship equally impacts
negatively on the growth of the economy. The coefficient of government expenditure which is
0.041175 implies that there is a direct relationship between manufacturing output and
government expenditure. This direct relationship shows that an improvement on government
expenditure improves the level of manufacturing output in Nigeria, which impacts positively on
the growth of the economy. It is not significant at any level. This shows that there is a weak
relationship between manufacturing output and government expenditure.
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