Effects of Agricultural inputs on Agricultural Productivity in Kenya: A Johansen Co-integration Approach

International Journal of Research and Innovation in Social Science (IJRISS) | Volume II, Issue X, October 2018 | ISSN 2454–6186

Effects of Agricultural inputs on Agricultural Productivity in Kenya: A Johansen Co-integration Approach

Harrison Kimutai Yego¹, Sharon Jebiwot Keror¹, Mathew Kipkoech Bartilol¹, Silas Kiprono Samoei, Carol Jeruto Rotich²

¹Department of Agricultural Economics and Resource Management, Moi University, Kenya
²Department of Environmental Sciences, Kenyatta University, Kenya
Corresponding Author: Harrison Kimutai Yego 

Abstract: – This paper empirically determined the effects of Agricultural inputs on agricultural productivity in Kenya utilizing time series data from 2001 to 2016. With agricultural productivity as the dependent variable, the study used a cointegration method to determine vector error correction estimatesof a Cobb-Douglass function. All factors kept constant a unit increase in Agricultural credit results to a to around 1.9% increase in agricultural productivity. An approximately 0.2% increase would be realized in agricultural productivity with a unit increase in agricultural capital formation. Climatic variables i.e. rainfall and temperature also influenced agricultural productivity positively with 0.8 and 4.4 coefficients respectively.Regarding Cobb-Douglas elasticity terms, the overall effect of the four variables (credit, capital formation, rainfall and temperature) results to an increasing returns to scale since7.2>1.

Key Words: Agricultural productivity, Cobb-Douglas function, Cointegration

I. INTRODUCTION

In Kenya, agriculture is the mainstay of the country’s economy contributing 27 percent of the count’s Gross Domestic Product (GDP) in 2014, [1] and Sub- Saharan economies should overlook the sector the their own peril. The sector, however, remains the major sector in the whole economy accounting for about 60 percent of the foreign exchange earnings in Kenya while also accounting for about 16 percent of the formal sector employment and also providing self-employment. There is, therefore a very high correlation between the growth of the national economy and development in the agricultural sector.
Agriculture is the sector from which the mainstream of the region’s people derive their livelihood, and their wellbeing is directly connected to the productivity of the means at their disposal. The nonfarm people also depend comprehensively on agriculture

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