Investigating The Relationship Between Agricultural Productivity And Economic Growth In Namibia

ABSTRACT  

Over the years, Namibia has made efforts to promote the agriculture sector in its National Development Plans. The current five-year plan still identifies the agriculture sector with the potential to boost economic growth to address challenges of food security, unemployment and poverty reduction. However, despite these efforts, the sector’s contribution to GDP remains minimal. Even though, economic theory supports the view that agriculture is a pre-requisite to stimulate growth it might not be the case for all countries. Therefore, this study investigated the relationship between agricultural productivity and economic growth in Namibia. The study specifically aimed to investigate the long run relationship between agricultural productivity and economic growth. Moreover, the study aimed to determine the direction of causality between agricultural productivity and economic growth. The study used time series data for the period 1981 to 2016. The Autoregressive Distributed Lag (ARDL) model was employed to analyze the data. The time series properties of the data were analyzed using Augmented Dickey Fuller and Philip Peron unit root tests. The long run relationship was assessed through the bound test to cointegration. In order to assess the nature of the causal relationship the Toda-Yamamoto Granger causality test was carried out. The unit root test results indicated that three of the four variables employed were non-stationary in levels, hence, they were integrated of order one and only one variable was integrated of order zero. The bound test to cointegration test results indicated a long run relationship among the variables employed. The Toda- Yamamoto Granger causality test results indicated a unidirectional causality from agricultural productivity to economic growth. No reverse causal flow was observed from economic growth to agricultural productivity. The study recommended that sectoral linkages should be strengthened and government should target policies that would improve the performance of the agricultural sector such as investing in the sector thereby increasing productivity as well as addressing other constraints that affect the sector.