The Role of Trade Policy in the Performance of Nigerian Agricultural Sector: A Time Series Analysis

O O Ogunjinmi ,A O Oduyoye-Ejumedia

doi:10.7176/jesd/12-16-08

Abstract

There has been an increasing interest in understanding the role of trade policy in agricultural performance over the years. This time-series study investigates the impact of trade openness and domestic currency rate on agricultural performance in Nigeria within the period, 1981-2019. Using the autoregressive distributed lag (ARDL) approach, the study confirmed that there exists a long-run relationship between trade policy and agricultural performance in Nigeria. The result showed that trade openness has a significant and positive effect on agricultural performance in Nigeria. Further, the study confirmed that trade openness contributes more to agricultural performance in the long-run than in the short-run. However, exchange rate impacted negatively and significantly on agricultural performance in the long-run. Meanwhile, the short-run estimates showed that exchange rate has a significant and positive effect on agricultural performance. More so, it was gathered that interest rate affects agricultural performance negatively in Nigeria. There is need for government to embark on outward looking trade policy that supports the agricultural industry in terms of its exportation of indigenous commodities and stimulation of output growth. Keywords: Agricultural output, trade openness, exchange rate, interest rates, ARDL. JEL Classification: Q19, F13, E52. DOI: 10.7176/JESD/12-16-08 Publication date: August 31 st 2021

Highlights

Nigeria is endowed with a large expanse of arable land, mineral and natural resources which makes agriculture the main stay of the country’s economy before and immediately after independence until the discovery of crude oil in commercial quantities in 1959
The results indicate that exchange rate is more volatile among the variables under studied
6.0 Conclusion and Policy Implications This research paper investigates the role of trade policy in the performance of agricultural sector in Nigeria

Summary

Introduction

Nigeria is endowed with a large expanse of arable land, mineral and natural resources which makes agriculture the main stay of the country’s economy before and immediately after independence until the discovery of crude oil in commercial quantities in 1959. Agriculture plays a crucial role in transforming the socio-economic frontier of Nigeria It has been a source of food and raw materials for the industrial sector, generation of employment, alleviation of poverty and improvement of income distribution (Anyanwu, 1997; Nwanji, Lawal, Asamu and Inegbedion, 2019). The agricultural sector’s annual growth rate for 2018 was 2.12%, which was lower than the 3.45% recorded in 2017 (National Bureau of Statistics, 2018). With respect to these vicissitudes and erratic nature of the agricultural sector, several policies such as agricultural trade policy that have been formulated and deployed by the government in promoting the sector’s output growth proves abortive due to the effect the Dutch disease that bedevils the country

Methods

Results

Conclusion