Can Foreign Direct Investment Complement or Substitute Public Agricultural Spending for the Sustainability of the Agricultural Sector in Nigeria? Empirical Evidence Using Monte Carlo Simulation

Abstract

The study analyzed the response of agricultural growth to foreign direct investment and public agricultural spending from 1980 to 2018. Data were collected from secondary sources and analyzed using Johansen Co integration, Vector Error correction model and Monte Carlo Simulation. The result showed that foreign direct investment and public agricultural spending increased agricultural production in the long but decreased it in the short run. The study concluded that an increase in foreign direct investment and an increase in public agricultural spending (scenario 3) provided the best alternative for the sustainability of agricultural growth in Nigeria. It was recommended friendly business policies should be made to attract more foreign direct investment into the country and the issues of insecurity and infrastructures should be handled for meaningful and sustainable FDI to be attracted into Nigeria.