A Time Series Analysis of Agricultural Output and Economic Growth in Kenya

Abstract

Agricultural productivity in many countries in Africa is predicted to greatly impact economic growth since it is the mainstay of the majority of the people. Nevertheless, the effect of output from agriculture on growth of an economy has borne diverse research interests with different findings from one nation to another. In this research, we seek to determine how agricultural output influences economic growth in Kenya using the VECM employing data between 1970 and 2017. Results from the study established that generally, agriculture, industry, service output, and capital formation are relevant to predict changes in GDP. The study results also indicate that in the short run, agricultural production positively influences growth but has no long run effect. Hence, agriculture productivity is significant in the primary phases of economic development. From the findings of the study, it is evident that agriculture facilitates economic progression in the short run and ought to be reinforced by macro strategies in due course to be positively affecting the economy in the long run.