How agricultural credit and subsidies impact agricultural productivity in Ethiopia: Empirical evidence using ardl model

Figures & data

Table 1. Definition, measurement and source of variables used in this study.

Variables	Measurement units	Source	Expected Sign
Dependent variable
Agricultural productivity	Agricultural value added per worker	WDI
Independent variable
Credit to agriculture	Millions of US dollars	FAOSTAT	+
Agricultural subsidy	% of expense	WDI	+
Land under cultivation	Hectares	WDI	+
Fertilizers consumption	Kilogram per arable land	WDI	+
Employment in agriculture	% of total employment	WDI	+
Pesticide use	Liters per hectare	FAOSTAT	+
Inflation rate	Consumer prices (% annual)	WDI	–
Foreign direct investment	Net inflows (% of GDP)	WDI	–

Table 2. Results of descriptive statistics.

Variable	Mean	Stad. Dev	Minimum	Maximum
Agricultural Productivity	0.59	0.0861	0.476	0.815
Credit to Agriculture	16952.20	54749.23	30.141	317652.4
Subsidy to Agriculture	40.97	18.6706	8.604	72.845
Land Cultivated	8600007	2262474	4040330	1.13e + 07
Fertilizer	19.49	10.3794	4.445	36.267
Agricultural Employment	73.12	5.12996	63.660	78.329
Pesticide Use	3332.57	7140.797	220	41345.1
Inflation Rate	11.78	11.7683	−8.484	44.356
Foreign Direct Investment.	2.34	1.8191	0.001	5.576

Figure 1. Trends of the interested variables.

Table 3. The augmented dickey-fuller unit root test.

Variables	ADF at level	P value	ADF at 1^st difference	P value	Order of Integration
Agricultural Productivity	−2.061	0.5680	−5.373 ***	0.0000	I(1)
Credit to Agriculture	−0.777	0.9676	−3.597**	0.0301	I(1)
Subsidy to Agriculture	−3.007	0.1302	−5.544***	0.0000	I(1)
Land cultivated	−2.027	0.5866	−4.334**	0.0028	I(1)
Fertilizer	−1.437	0.8497	−4.256**	0.0037	I(1)
Agricultural Employment	−0.570	0.9804	−3.707**	0.0219	I(1)
Pesticide Use	1.060	0.9949	−4.355***	0.0004	I(1)
Inflation rate	−3.904***	0.0020	−8.155***	0.0000	I(0)
Foreign Direct Investment	−2.470	0.3430	−4.669***	0.0008	I(1)

Note: Significance is indicated by ***, **, and * at 1%, 5%, and 10%, respectively.

Table 4. Bound test results for ARDL.

	Bounds of critical value
F-Statistics	Significance	lower bound	upper bound
	10%	1.95	3.06
95.661***	5%	2.22	3.39
	2.5%	2.48	3.70
	1%	2.79	4.10

Note: Significance is indicated by ***, **, and * at 1%, 5%, and 10%, respectively.

Table 5. Long-run and short-run estimates using ARDL (all variables are in log form).

Variable	Coefficients	Stad. error	t- statistics	P- value
Long-run estimate
Agricultural Credit	0.0483	0.0230	2.10	0.074
Subsidy to Agriculture	−0.0503	0.0184	−2.73	0.029
Land Cultivated	0.1039	0.1059	0.98	0.359
Fertilizer	−0.0647	0.0472	−1.37	0.213
Employment in Agriculture	1.2032	0.3336	3.61	0.009
Pesticide Use	0.1283	0.0518	2.47	0.043
Inflation Rate	−0.0101	0.0020	−4.89	0.002
Foreign Direct Investment	−0.0700	0.0158	−4.42	0.003
Short-run estimate
Agricultural Credit	−0.0375	0.0142	−2.64	0.033
Subsidy to Agriculture	0.0530	0.0137	3.86	0.006
Land Cultivated	−0.0022	0.0406	−0.06	0.957
Fertilizer	−0.0377	0.0324	−1.16	0.283
Employment in Agriculture	4.0129	0.7358	5.45	0.001
Pesticide Use	−0.0575	0.0420	−1.37	0.213
Inflation Rate	0.0053	0.0006	8.46	0.000
Foreign Direct Investment	−0.0094	0.0047	−1.98	0.088
Error Correction Term EC (_1)	−0.8105	0.0836	−9.69	0.000

Note: ***, **, * indicates significance at 1%, 5%, and 10%, respectively. 

Table 6. Results of diagnostic tests.

Tests	F- Statstics	P- Value
Autocorrelation	0.003	0.9543
Hetroskedastisity	0.059	0.8074
Normality	0.84	0.6574
CUSUM		Stable

Figure 2. Coefficient stability test result.

Data availability

Data available on request from the authors.