Analysis of trade liberalization policies on agricultural output growth in Nigeria (1960-2014)

Ekanem Abasiekong Etuk,Mfonobong Okokon Effiong,Francis Onwe Igbodor

doi:10.4314/gjass.v16i1.7

Abstract

The study was carried out to analyse the effect of trade liberalization policies on agricultural output growth in Nigeria, using time series data from 1960-2014.The objectives were to; estimate the differences in agricultural output before and after trade liberalization period and estimate the long and short-run effect of agricultural trade policies on agricultural output in Nigeria. Data for the empirical study were sourced from various issues of the Central Bank of Nigeria (CBN) statistical bulletin and publications of the National Bureau of Statistics (NBS). Both descriptive and inferential statistics were used to analyze the data. The estimation procedure was the co-integration and error correction model. The analysis reveals that the mean agricultural output after trade liberalization (AGR GD2) was different from that of the pre-trade period (AGR GD1) and also the t-test result confirms that there exist a significant difference between agricultural output during the pre-trade and post-trade liberalization period given that the t cal (4.5146) was greater than the t crit (2.0484) at 5% level of significance. The long–run and short-run regression results shows that trade openness and exchange rate had a negative effect on agricultural output in the three models meaning that trade openness will lead to reduction in agricultural output both in the long and short-run. The study therefore recommended that monetary authorities should adopt policies that will reduce the volatility of the exchange rate. Also the institution of import quota could curb the negative effect of trade openness on agricultural output growth in Nigeria. Keywords: Agricultural output, Trade liberalization, Trade openness, long-run, Short-run

Highlights

Prior to the oil boom of the early seventies, Nigeria’s agricultural development efforts enjoyed tremendous government support in form of production, processing and marketing incentives
There was a consistent decline in aggregate Agricultural output due to the negative influence of this marketing boards in the 1970s and 1980s as efforts were made by the authorities to find out the appropriate policy response towards restoring Agricultural output to the prime position it used to enjoy before the advent of crude oil boom
The commodity boards, have rendered the Nigerian agricultural commodity less attractive and its contributions to Gross Domestic Product (GDP) have remain obscure. It is in this light that this study seeks to answer the following questions; what is the trend of agricultural output before and after the trade liberalization periods? Are there differences in agricultural output before and after trade liberalization periods? And what is the long and short run impact of agricultural trade policies on agricultural output growth over the years?, and at the same time, suggest policy recommendations expected to bring back the lost glory of the agricultural sector in the country, and there is no better time than when the prices of oil is dwindling with its attendant effects on the country’s revenue, the best sector to salvage the situation is agriculture

Summary

INTRODUCTION

Prior to the oil boom of the early seventies, Nigeria’s agricultural development efforts enjoyed tremendous government support in form of production, processing and marketing incentives. The commodity boards, have rendered the Nigerian agricultural commodity less attractive and its contributions to GDP have remain obscure It is in this light that this study seeks to answer the following questions; what is the trend of agricultural output before and after the trade liberalization periods? The results of the study showed that liberalization supports economic growth in Nigeria with an evidence of a long run relationship. Further results showed that trade liberalization on an aggregate exact a significant positive impact on agricultural output in Nigeria. It impact on an average is about 14 percent in increase on agriculture output. Results suggest the imperative for Nigerians to embark on trade liberalization policies in order to sustain growth in agriculture and industrial sectors

Sources of data

The Model

ESTIMATION PROCEDURE

RESULTS AND DISCUSSIONS

CONCLUSION