Volume : 3, Issue : 3, JUN 2019

Long and Short-run Analysis of Government Rural Infrastructural Spending on Cereals Enterprise income in Benue State Nigeria: 1990-2012

Chancha T.E, Ater P.I, Onuk, E.G

Abstract

This research analyzed empirically the effects of government rural infrastructural spending on income of cereals (maize, millet and sorghum) in Benue state, Nigeria. Secondary time series data for 23years were analyzed using Augmented Dickey-fuller unit root test which confirmed stationarity at first difference 1(1), Johansen’s co-integration revealed a long-run relationship between effects of government rural infrastructural spending on income of cereals (maize, millet and sorghum) in Benue state Nigeria. The vector error correction model (VECM) was used to analyze the long and short-run effects of government rural infrastructural spending on cereals enterprise income in Benue State Nigeria and revealed that, the coefficient of government spending for educational and Road infrastructures were all negative (-1.5032 and -0.1095) for maize (-1.5032 and -1.1095) for millet and (-2.6237 and -0.7593) for sorghum respectively. This was contrary to a priori expectations. In contrast, the effect of  government spending on health infrastructure in the previous year on income enterprise of maize, millet and sorghum were positive and significant at 1% probability level with the coefficients of 2.66, 6.50 and 2.77 respectively in the long-run. Short-run analysis of government rural infrastructural spending on incomes of maize and millet enterprise income revealed no short-run relationship on their enterprise income. However analysis of rural infrastructure spending on income of sorghum enterprise showed a positive significant relationship with the coefficient of (0.5018) at 10% probability level, following government spending on education two years ago. Based on the findings of the research, it is recommended that; policy makers should pay closer attention to integrated rural infrastructure development as a whole rather than discrete component improvement of infrastructure by increasing budgetary allocation to rural development and promoting larger production of cereals and yearly budgetary allocation to benefit from ecologically disadvantaged area of cereals production for the state.

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