THE EMPIRICAL INVESTIGATION OF THE RELATIONSHIP BETWEEN THE AGRICULTURAL SECTOR AND THE INDUSTRIAL SECTOR AS A STRATEGY FOR ECONOMIC GROWTH AND DEVELOPMENT IN NIGERIAN(A CASE STUDY OF NIGERIA ECONOMY)

TABLE OF CONTENTS

Title page

Certification

Dedication

Acknowledgment

Proposal

Table of contents

CHAPTER ONE

1.1    Introduction

1.2    Industrial and agricultural growth

1.3    Statement of problem

1.4    Objective of study

1.5    Rationale of study

1.6    Hypothesis

1.7    Methodology of research and sources

1.8    Scope of study

1.9    Organization of work

CHAPTER TWO

2.1    Literature Review

2.2    Theoretical Framework

2.3    Agricultural Sector

2.3.1 Agricultural Exports

2.3.2 Domestic Demand for and consumption of major Agricultural products

2.4    Industrial Sectors

2.4.1 Manufacturing industry

2.4.2 Performance of selected federal government core industrial projects (CIPS)

CHAPTER THREE

3.0    An overview of agricultural role, policies in industrial development in Nigeria

3.1    Introduction

3.2    Synthesis of agriculture outlook from the 80’s

3.3    Some specific policies to boost agricultural outlook

3.3.1 The national Accelerated food production programme

3.3.2 Operation feed the nation (OFN)

3.3.3 The Green revolution

3.3.4 Macroeconomic policies

3.3.5 Sector specific policies

3.3.6 Farm settlement

3.3.7 Land use degrees

3.3.8 Directorate of food, roads and rural infrastructure (DFRRI)

3.4    Interdependence among the different sectors of an economy

3.5    Need for a structurally balance economy

CHAPTER FOUR

4.1    Economic analysis of agricultural and industrial relations in Nigeria

4.2    The analysis of the regression of the relationship between agricultural and industry

4.2.1 Model specification

4.2.2 Model interpretation

4.2.3 Re-statement of the hypothesis

4.2.4 Standard error test

4.2.5 T-test

4.2.6 F-test

CHAPTER FIVE

5.0    Summary, Conclusion and Recommendations

5.1    Summary

5.2    Conclusion

5.3    Recommendation

References

CHAPTER ONE

1.1    INTRODUCTION

Changes in the relative importance of agriculture and industry have been recognized as the core of the process of growth. Hence agricultural process is a prerequisite for industrial development which metamorphosed to economic growth and development. In industry it is the role of manufacturing sector that appears to be the strategic factors in modern economic growth. One of the issues confronting many developing countries is sectorial balance, determining which area of development most to the economy as a whole.

Except for few countries, the discernible patterns are overwhelmingly agricultural and industrial interdependence. Agriculture involves the cultivation of land, raising and rearing of animals for the purpose of production of food for man, feed for animals and raw materials for industries. It involves forestry fishing, processing and marketing of those agricultural products. The role of agriculture in transforming both the social and economic work of an economy cannot be put off with wave of hand.

On the other hand, an industry refers to a number of rims producing broadly similar commodities. Thus, industrialization is the process of building up a nation’s capacity to convert raw materials and other inputs to finished goods and to manufactured goods for other production or for final consumption. Agriculture provided the needed surplus for industrialization processes in most developed countries and lately in south Asian and Latin American countries. The industrial sectors adds to the demand for goods produced by the agricultural sectors and this may increase productivity in agriculture. Higher agricultural product will provide capital and market for new industries, while industries will absorb the surplus labour, which agriculture must release in its process of improvement.

Before and immediately after interdependence in 1960, agriculture was the mainstay of the Nigerian economy accounting for more than one-half of the Gross Domestics Product (GDP) and more than three-quarter of exports earnings. The contributions of agriculture to GDP moved from 50 percent in 1970 to 38.8 percent in 1991 and by 1995 this has declined further to only 32 percents. In fact, by mid 1980’s Nigeria has moved from a position of self-sufficing in basic foodstuffs to one of heavy dependence on inputs, as mush emphasis was shifted to the petroleum sector. Thus, the observed drop of relative share of agriculture in aggregate output reflects the period of windfall from petroleum income when farm production was depressed by the massive urban boom and movement of rural workforce to cities.

On the other hand, emphasis on industrialization as a means of diversifying production patterns and import-substitution and semi-processing of cash crops for export and later on the establishment of light intermediate and heavy industrial complexes in the 70s and 80s. consequently, the manufacturing sub-sector accounted for about 4 percent of an annual average of less than 10 percent between 1983 and 1995.

Struthers (1990) described this simultaneous decline in the agriculture and industry as ‘Dutch Disease’ which could be attributed to poor linkage between the sectors, despite the huge earnings from the petroleum sectors. Moreover when the two sectors wait for each other to perform the thrust and feedback expected of them, the pace of economic growth tends to slow down or stagnate.

Economic historians have shown that all economically advanced countries today were once predominantly agricultural at their early stages of development. They repeatedly emphasized that an expanding agricultural sectors forms the basis for industrial expansion and development by raising the level of real income in the agricultural sector thereby extending the potential market for manufacturing goods, opening a new source of capital for the establishment of industry and making possible the purchase of foreign tools and equipment necessary for industrialization.

1.2    INDUSTRIAL AND AGRICULTURAL GROWTH

 On attaining independence in 1960, the agricultural sector maintained its dominant position as the major foreign exchange earner. The sector accounted for more than half of the GDP and provided enough food for the teeming population. Traditional small holder farmers who use simple techniques of production and the bush-fallow system of cultivation, account for about two-thirds of Nigeria’s total agricultural production. Before 1939, there was virtually no manufacturing industry in Nigeria. Cotton was partially processed and cigarettes were manufactured at Ibadan, but there was very little else. In recent years however, and particularly since 1948, there has been a rapid and important growth of factory industry. A major objective of the country’s economic policy is to promote the growth of industry, both to increase the wealth of the country and also to provide new sources of employment.

The highest industrial growth was achieved during the period of 1966-70 when the sector recorded an average growth rate of 25.9 percent, compared with 12.4 and 13.4 percent achieved in the preceding periods of 1971/75 when the country was just recovering from the devastating effect of civil war Nigeria’s economics history can be said to have been pre-determined by the industrial expansion of Europe at that time. For instance, crop such as palm kernels and groundnut provided and invaluable source of raw materials for appropriates industries of Europe he said “it takes more than industry to industrialize” this the more developed these industries were the more the raw materials were required and the more country like Nigerian will produce.