Impacts Of Government Budgetary Allocation On Agricultural Sector Growth

Abstract

Agriculture has been the economic pillar of the Kenya’s economy contributing 24 percent of the GDP. The sector is not only the driver to economic growth but also the means of livelihoods to majority of the Kenyans. Literature shows out the high relationship between budgetary allocation in agricultural sector and agricultural economic growth. Kenya has developed many development plans identifying agricultural sector as among the priority sectors that can lead to achievement of the set objectives. Agricultural sector has registered increasing performance from the year 1994 to 2014. A number of developments have been implemented with an aim of improving the productivity of agricultural sector and the economy as a whole. There is need to come up with strategies that should be implemented to enable continuous increase in the agricultural output. This study examined government budgetary allocation and its impacts on agricultural productivity in Kenya. The study utilized annual data for the period from 1994-2014. A regression analysis was done using ordinary least squares (OLS) method to evaluate the significance of the factors. The study results show that agricultural output is determine by budgetary allocation and agricultural price index. Productivity is increased with increased budgetary allocations because there is a positive relationship between budgetary allocation and the agricultural sector. The study therefore recommends for an improved policies enhancing budgetary allocation on the sector to enable increase in productivity in the sector.