Investigating the nexus between investment in agriculture and agriculture output: a case for Namibia

This paper explores the link between agriculture investment and agriculture output in Namibia. The existing theory on investment and growth constitutes a basis for empirical work on investment-output nexus. Neither the neoclassical nor the new growth theories on investment have considered the growth effects of investment at sector and industry level and its implication on capital allocation, particularly for developing countries that are resource constrained. The key question addressed in this paper is whether investment in agriculture is associated with agriculture output, both at the sector and sub-sector levels. The paper adopted the ARDL bounds test model constructed with quarterly data for the period 2000 to 2020 and found that investment and agricultural output exhibit a long-run relationship. The coefficient estimates showed that public investment, development bank loans and agriculture export have a positive impact on agricultural output while inflation, lending rates and commercial bank loans have a deleterious effect. The long-run causality tests suggest that there is unidirectional causality between commercial credit expenditure and aggregate agriculture output, as well as a unidirectional causality running from exports to livestock and crop sub-sector output. Based on error correction terms, agriculture output tends to rapidly adjust to short-term disturbances, hence rebound of agriculture output to a long-run growth path can take place with minimum or no delays. This study concludes that the Keynesian hypothesis is valid for Namibia's agriculture and the direction of causality is from investment to agriculture growth. Therefore, the role of government in supporting sustainable development of the agricultural sector cannot be overemphasised.

Grantor

Graduate School of Business (GSB)

Year dc:date.issued

2021

Author dc:creator

• Jakob, Alisa

Advisor dc:contributor.advisor

• Kabinga, Mundia

• Agricultural output
• ARDL bounds test
• commercial loan credit
• development loan credit
• error correction
• public investment
• Namibia

Handle dc:identifier.uri

http://hdl.handle.net/11427/35599

OAI identifier oai:identifier

oai:open.uct.ac.za:11427/35599