Agricultural Output and Economic Growth in Kenya: a Causality Test

Abstract

The link between economic growth and agricultural output is extensively documented, but the causal relationship has not been well investigated. Understanding the relationship between the two factors can aid policy development in both domains. This study looks into the causality regarding economic growth and agricultural output in Kenya from 1971 to 2019. The study adopted the ARDL model to estimate the short-run and long-run relationship between agricultural output and real GDP. According to the study, agricultural output has no causal and non-significant influence on economic growth. Based on that, the government should reconsider improving real interest rate, gross domestic saving, gross capital formation, inflation rate, and foreign direct investments to enhance the economy. Keywords: Economic Growth, Agricultural Output, Granger causality test