Error Correction Term Research Articles

Green energy investment, renewable energy consumption, and carbon neutrality in China

This study investigates the dynamic impact of green energy investment and energy consumption on carbon emissions in China from 1995 to 2020. It employed the Bootstrap Autoregressive Distributed Lag method to examine the short and long-run relationship. The long-run findings indicate that green energy investment and renewable energy consumption decrease carbon emissions, whereas non-renewable energy consumption and economic growth increase carbon emissions in shorter and longer periods. The long-term reduction in carbon emissions may imply the transition toward carbon neutrality. However, the marginal contribution of renewable energy towards carbon neutrality is significantly higher than green energy investment due to investment lag effects. Moreover, the Error Correction Term (ECT) is significantly negative, authorizing the convergence towards steady-state equilibrium in case of any deviation with a 25% adjustment rate. The empirical results suggest that China should encourage green energy investment and increase the share of renewable energy sources to ensure carbon neutrality in the long run.

How responsive is the poverty to the foreign direct investment inflows in Nigeria? Evidence from linear and non-linear ARDL

PurposeThe aim is to examine the long run and short run linear and non-linear impact of foreign direct investment (FDI) inflows on poverty in Nigeria from 1980 to 2019.Design/methodology/approachThe Augmented Dickey Fuller, Phillips Perron and Kwiatkowski-Phillips-Schmidt-Shin unit root tests and bounds test were used to tests the series stationarity and co-integration, respectively. Autoregressive Distributive Lag (ARDL) and non-linear and linear autoregressive Distributive Lag (NARDL) estimators are employed to examine the long run and short run impact of the coefficients of the variables and diagnostic check.FindingsThe study finds that the variables are integrated at a level I(0) and the first difference I(I) and co-integrated. The ARDL estimator indicates that FDI significantly reduces poverty in the long and short run. The findings under NARDL shows FDI positive shock and FDI negative shock reduces poverty substantially in the long-short run, respectively. The error correction term is negative and significant.Research limitations/implicationsThis study is limited to a single country (time series) and less informative compared with the panel data study with much informative and free from hetero-scedasticity. Future studies should consider panel data using a similar or dissimilar approach.Practical implicationsFDI inflows stimulate growth, thereby creating job openings, transfer of modern technology and reduce poverty and demonstrate that, if the finding integrated into policy actions, the government would attract FDI inflows for the real sector of the economy.Social implicationsFDI inflows lead to environmental degradation if inferior technology is use in the host economy, especially the weak environmental regulations in Nigeria.Originality/valueThe authors find no study that applied both ARDL and NARDL estimator, selection of variables measurement and time frame for the study in the context of Nigeria.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-08-2020-0530.

Examining the Export-Led Growth Hypothesis: Empirical Evidence from Sudan

The current study analyzes the relationship between Sudan's income growth and exports from 1970 to 2020. The system of equations using the Autoregressive Distributed Lag (ARDL) approach has been employed. The ARDL results showed that there exists a long-run relationship between the variables considered in the estimated model. The researchers observed a negative lagged error-correction term coefficient, which is highly significant in all cases supporting cointegration. The result reveals the existence of a long-run equilibrium relationship between GDP, export, import, labor force, and trade policy. This confirms that the export-led growth hypothesis is valid for Sudan. Thus, the most essential conclusion is that the economy’s export expansion strategy is completely dependent on the imports of raw materials and capital inputs and the kind of goods being exported. The coefficient of import is of significance, which offers strong support for the import compression hypothesis. The most important policy implication of the findings is the implementation of an appropriate and optimal approach that can boost exports to increase economic growth substantially. Policy-makers should focus on export diversification strategies and invest more in Sudan’s ability to provide value-added services to meet international export demand.

PENERAPAN ERROR CORRECTION MECHANISM DALAM PEMODELAN PERTUMBUHAN EKONOMI PROVINSI JAWA TIMUR TAHUN 2005-2021

The economy of East Java Province, as indicated by the Gross Domestic Regional Product (GDRP), experienced a contraction due to the Covid-19 pandemic by 2.33 percent. The shock will disrupt the stability of the East Java economy if it is not handled quickly and accurately. This study aims to establish an appropriate model for analyzing economic growth through GDRP in East Java by using the independent variables Human Development Index (IPM), Gross Fixed Capital Formation (PMTB), GDRP of Manufacturing Industry Sector (IP), and Regional Minimum Wages (UMR) using the Error Correction Mechanism (ECM) model to obtain long-term and short-term relationships of these variables. The results showed that the IPM, PMTB, and UMR had a positive and significant relationship with GDRP in the long term, while the IP variable had a positive but not significant relationship with GDRP in the long term. In the short term, IPM, PMTB, IP, and UMR have a positive and significant relationship with GDRP. In addition, there is an Error Correction Term (ECT) coefficient of -0.8917 which means that the influence of the IPM, PMTB, IP and UMR variables will be corrected by 89.17 percent toward long-term balance in each period

Estimation of Demand for Beef Imports in Indonesia: An Autoregressive Distributed Lag (ARDL) Approach

Import policies for food products, including beef, need to support national food security while protecting the domestic food industry. This study aims to develop a model for beef import demand of Indonesia. The study employed annual secondary data from various sources from 1990 to 2019. Autoregressive distributed lag (ARDL) and the error correction models (ECM) were adapted for predicting the long-run and short-run beef import demand, by considering income growth, domestic production, relative price, and exchange rate. The bounds test showed that gross domestic product (GDP) growth per capita, domestic beef production, and the exchange rate had no significant effect on the beef import demand in the long run; nonetheless, the relative beef price between local and international market had a considerable impact (5.353%). In the short run, GDP growth per capita and domestic beef production significantly affected beef import demand (0.036% and −0.9%, respectively). Error correction term (ECT) corrected the disequilibrium of the import demand model in current year towards the following year (17.60%). This finding is confirmed by the fully modified ordinary least squares (FMOLS), dynamic ordinary least squares (DOLS), and canonical co-integrating regression (CCR) methods. Ultimately, this study can serve as an instrument for formulating policy related to beef imports in Indonesia.

The degree of responsiveness of fiscal and monetary policy in Sierra Leone

PurposeThe degree of responsiveness of fiscal and monetary policy mechanisms that promote growth and development in Sierra Leone is the subject of this article.Design/methodology/approachThis article uses both the Auto Regressive Distributed Lag (ARDL) model presented by Hashem and Yongcheol (1998) and the Non-Linear Auto Regressive Distributed Lag (NARDL) model by Shin et al. (2014) to analyze annual time-series data in evaluating the asymmetric effect of real gross domestic product (RGDP), inflation, government expenditure and money supply using annual time-series data for 40 observations over the period 1980–2019.FindingsThe augmented Dickey–Fuller unit root test shows that money supply, government spending and consumer price index are integrated at first difference I (1), while RGDP is stationary at level I (0). The results of the NARDL cointegration test indicate that the variables are cointegrated. The study shows that government expenditure is a positive function of both positive and negative changes. Hence, both positive and negative cumulative sum government expenditures improve economic growth but show a relative weak asymmetric effect with the regressand. This study also reveals that inflation is a negative function of both positive and negative changes with asymmetric effect with the dependent variable. This study shows that the positive change of money supply is statistically insignificant in boosting economic growth, while the negative change positively improves economic growth. Conclusively, this article shows that fiscal policy has a greater and more responsive than monetary policy in promoting growth and development in Sierra Leone. The result of the error correction term of the NARDL model shows a high spend of adjustment of 135% from any disequilibrium of GDP imbalance in the economy.Originality/valueTo address the problem of fiscal dominance in Sierra Leone, this study recommends that fiscal and monetary policies should be coordinated simultaneously and to an appropriate extent to achieve the desired outcome in growth and development.

Old age pensions and economic development Analyzing the economic return of Pension in Mauritius

This paper attempts to assess the impact of social protection, with particular emphasis on old age pension on the economic growth of the island of Mauritius. The study makes use of rigorous time series econometric analysis over the period 1987 to 2018 to gauge if and the extent to which social protection and pension have been productive in the case of Mauritius. Results show that there is a positive and significant relationship between pension and economic growth in Mauritius. The coefficient of 0.123 is a measure of the efficiency of performance of pension concerning GDP creation. It is a measure of output elasticity of pension. A 1% increase in pension is likely to increase economic growth by 0.12%. In the short run, it is observed that there is an insignificant, although positive link, between pension and economic growth. This may indicate that the effects of pensions are felt on economic growth rather in the long run. The negative lagged value of the Error correction term indicates the existence of a long-term relationship and an adjustment of the effect to its long-run estimate. As far as the other determinants of Mauritian economic growth, it is found that it takes time for them to impact economic growth and thus remain essential long-term influencers.

Capital mobility in Latin American and Caribbean countries: alternative view on the “Feldstein-Horioka” coefficient

PurposeThe purpose of this study is to examine two issues, namely the degree of current account deficit (CAD) sustainability and the degree of capital mobility.Design/methodology/approachThe sample for this study comprises 24 Latin American and Caribbean countries, including three regional agreements: Andean Community, MERCOSUR (Mercado Común del Sur), and SICA (Central American Integration System). This study employs the dynamic common correlated effects mean group (DCCEMG) estimator in a panel data set to investigate the long-run relationship between savings and investment along with short-run dynamics.FindingsThe findings indicate that CAD is weakly sustainable in the Latin American and Caribbean region, MERCOSUR, and SICA, while CAD is strongly unsustainable in the Andean Community. The sub-period analysis reveals that CAD has been adversely affected by the 2008 crisis. However, in the post-crisis period, CAD has been slowly decreasing in the Latin American and Caribbean region and Andean Community, whereas CAD has continued increasing in MERCOSUR and SICA. Further, the estimates of error-correction terms and short-run coefficients indicate that the Andean Community and MERCOSUR observe a higher degree of long-run and short-run capital mobility than SICA.Practical implicationsThe results carry fundamental implications for policy-making processes aimed at maintaining sustainable CADs.Originality/valueThis study gives an alternative interpretation of the “Feldstein-Horioka” coefficient in terms of CAD sustainability and analyses the saving–investment relationship in light of Chudik and Pesaran (2015).

A more exhaustive study on the finite‐time and exponential tracking continuous control for constrained‐input mechanical systems: Improved design and experiments

AbstractA more exhaustive study on the finite‐time/exponential tracking continuous control for mechanical systems with input constraints is developed. The resulting control scheme is characterized by the inclusion of position‐error and velocity‐error correction terms which are suitably shaped to achieve the concerned types of convergence. Such a shaping is carried out through control parameters that act as exponential weights on the gained position and velocity errors. As an innovative aspect of the proposal, such exponential weights are not restricted to satisfy a fixed equivalence relation among them but rather a wider comparative one. This gives rise to a wider spectrum of finite‐time convergent closed‐loop trajectories and gives an optional type of (unconventional) exponential convergence (in addition to the conventional one), which enlarges the controller potential for performance adjustment. This is further potentiated through a more generalized saturating structure on the error correction terms, that includes the usual saturating‐proportional saturating‐derivative type one as a particular case. The improved design is supported through a more general analysis based on more general strict Lyapunov functions, stating more solid analytical bases for possible design extensions on the accomplishment of other (more complex) control objectives. The study is further supported through experimental tests on a 3‐degree‐of‐freedom robot manipulator.

Integration of renewable energy, environmental policy stringency, and climate technologies in realizing environmental sustainability: Evidence from OECD countries

This study investigates the role of solar energy, environmental policy stringency (EPS), and climate technology in realizing environmental sustainability in OECD economies from 2001 to 2018. The preliminary findings confirm the issues of slope heterogeneity and cross-sectional dependency; thus, we apply the cross-sectional augmented autoregressive distributed lags (CS-ARDL) model. The overall results indicate that solar energy, EPS, and climate technologies are playing a positive and significant role in encountering environmental issues and ensuring environmental sustainability in the long run, while economic growth is the key driver of environmental degradation. A similar insight is observed in the short run; however, their coefficient size and significance substantially vary. Moreover, the Error Correction Term is significantly negative, implying the convergence towards long-run equilibrium in case of any shock in the short-run. These results are consistent with alternative estimators and suggest the promotion of solar energy, implementation of stringent ecological policies, and climate technologies to achieve inclusive and sustainable growth.

ANALISIS PENGARUH FINTECH ADOPTION TERHADAP PROFITABILITAS BANK UMUM KONVENSIONAL DI INDONESIA

Covid-19 pandemic that occurred in Indonesia had a serious impact on all sectors, one of which was the financial and banking sectors. This phenomenon requires the banking sector to overcome it through the application of financial technology. This study aims to determine the effect of Fintech adoption on the financial performance of conventional commercial banks in Indonesia in terms of the Return on Assets ratio during the period 2013 - 2021. This study uses the Error Correction Term analysis method to see the effect of the independent variable on the dependent variable in the long term. short and long term. The independent variables in this study include mobile banking, internet banking, and phone banking and the dependent variable is the ratio of ROA. In addition, this study includes control variables consisting of bank size and total credit as well as a dummy variable, namely the covid-19 pandemic. This study results that mobile banking has a positive and significant effect on ROA in the short and long term, internet banking has a negative effect. and significant to ROA in the short and long term, phone banking has a positive but not significant effect on ROA in the short and long term.

Stock market performance: Reaction to interest rates and inflation rates

This paper investigates the wealth effects of the consumer price index, interest rate, domestic credit and real economic activity on the Amman Stock Exchange performance. Over the period 1991–2020 using the autoregressive distributed lag (ARDL) bounds test. While the interest rate is a powerful monetary tool to fight inflation and recession, it can be detrimental to investors. The target variables, consumer price index (CPI) and interest rate (IDR), are both highly significant with the correct signs. An increase of 1 percent in CPI and IDR leads to a fall in stock prices by 1.6 percent and 5 percent, respectively. While the central bank is targeting inflation by raising interest rates, its actions reflect negatively on the stock market. The short-run model confirms the causality from the independent variables to the dependent variable. Moreover, the error correction term (ECT) is very high and significant at the 1 percent level amounting to 83.3 percent, which confirms the evidence of the long-run relationship. Monetary objectives are really important, but financial stability is also important.

Factors Associated with Growth in India’s International Reserves: VECM Analysis

This study empirically examines the determinants of India’s international reserves in the long run and in the short run with seven other macroeconomic variables using the vector error correction model. The Johansen co-integration results indicate a positive long-run relationship between international reserves holdings and broad money M3 and foreign direct investment (FDI) inflows and negative relationship with external debt. The Granger causality test outcome also verifies the results, demonstrating that increase in broad money supply and FDI inflows are the reason for the accumulation in international reserves in India in the long run. M3 demonstrated a higher influence on international reserves suggesting that monetary policy is used widely in regulating the international reserves in India. This study also estimated the short-run dynamics and the tendency of the variables to reinstate to its long-run equilibrium. The error correction term coefficient entails a moderately low level of adjustment of international reserves holding, indicating that it is the other reason that the level of international reserves holding in India is high in the short run. JEL Codes: E51, F31, F41

External Debt Burden and Infrastructural Development Nexus In NIGERIA: An Ardl Approach(1981-2020)

This study focused on external debt burden and infrastructural development nexus in Nigeria using data spanning between the periods 1981 to 2020 by employing the use of Autoregressive Distributed Lag Model (ARDL) and granger causality test as the major statistical techniques of analysis.From the findings,the coefficient of error correction term shows that about 70 percent of the discrepancy between the actual and the long run or equilibrium value of infrastructural development is corrected or eliminated each year. The coefficient of determination (R2) is 0.680 which shows that about 68 percent variations in the infrastructural development were explained by the independent variables. The Augmented Dickey Fuller (ADF) unit root test shows that all variables were stationary at first difference. The results for the Bounds test reveal that there is a long run relationship among the variables. This is because the F-statistics value (5.194) is greater than upper Bounds critical values at 5% level of significant. The ARDL results show that external debt, domestic debt and inflation rate have a negative impact on infrastructural development in the long run while exchange rate and interest rate has a positive effect on infrastructural development in the long run. Also, domestic debt and exchange rate were found to have a significant impact on infrastructural development while external debt, inflation rate and interest rate were found to be insignificant in the long run. Furthermore, the granger causality test results indicate while there is no causality between external debt and infrastructural development, there seems to be a unidirectional causality between domestic debt and infrastructural growth in Nigeria. The study concludes that federal government of the country should cut down excessive borrowings and that the existing ones are invested in projects that would eventually generate enough returns to defray such debts accordingly. Also, an adoption of policy framework that will ensure macroeconomic stability such as price stability, job creation, increased output, political stability, etc. becomes fundamental in getting rid of heavy reliance on external debt in the country.

House price dynamics in Iberian Metropolitan Statistical Areas: slope heterogeneity, cross-sectional dependence and elasticities

PurposeThis paper studies the dynamics and elasticities of house prices in Spain and Portugal (Iberia) at the Metropolitan Statistical Area (MSA) level, addressing panel regression problems such as heterogeneity and cross-sectional dependence between MSA.Design/methodology/approachThe authors develop a two steps study. First, five distinct estimation methodologies are applied to estimate the long-term house price equilibrium of the Iberian MSA house market: Mean Group (MG), Fully Modified Ordinary Least Square (FMOLS) MG (FMOLS-MG), FMOLS Augmented MG (FMOLS-AMG), Common Correlated Effects MG (CCEMG) and Dynamic CCEMG (DCCEMG). FMOLS-AMG is found to be the best estimator for the long-term model. Second, an additional five distinct estimation methodologies are applied to estimate the short-term house price dynamics using the long-term FMOLS-AMG estimated price in the error-correction term of the short-term dynamic house price model: OLS Fixed Effects (FE), OLS Random Effects (RE), MG, CCEMG and DCCEMG. DCCEMG is found to be the best estimator for the short-term model.FindingsThe results show that in the long run Iberian house prices are inelastic to aggregate income (0.227). This is a much lower elasticity than what was previously found in US MSA house price studies, suggesting that there are other factors explaining Iberian house prices. According to our study, coastal MSA presents an inelastic housing supply and a price to income elasticity close to one, whereas inland MSA are shown to have an elastic supply and a non-significant price to income elasticity. Spatial differences are important and cross-section dependence is prevalent, affecting estimates in conventional methodologies that do not account for these limitations, such as OLS-FE and OLS-RE. Momentum and mean reversion are the main determinants of short-term dynamics.Practical implicationsRecent econometric advances that account for slope heterogeneity and cross-section dependence produce more accurate estimates than conventional panel estimation methodologies. The results suggest that house markets should be analyzed at the metropolitan level, not at the national level and that there are significant differences between short-term and long-term house price determinants.Originality/valueTo the best of the authors' knowledge, this is the first study applying recent econometric advances to the Iberian MSA house market.

Determinan Indeks Harga Saham Gabungan (IHSG) Jangka Pendek dan Panjang

Abstract: Purpose: This study aims to analyze the effect of stock market capitalization and external factors on the Composited Stock Price Index (IHSG). Research methodology: This study uses secondary data with the type of time series data obtained from the publication of the official website of The Otoritas Jasa Keuangan (OJK), U.S. Energy Information Administration (EIA), London Bullion Market Association (LBMA) and Yahoo Finance for the period January 2011 - December 2020. The model used in this study is the Error Correction Model (ECM). Results: The results showed that all independent variables in the short term had a significant effect on The IHSG. Stock market capitalization, world oil prices and The Hang Seng Index have a positive effect, while world gold prices have a negative effect. The Error Correction Term (ECT) has a coefficient of -0.2045 with a significant negative direction with a 5% confidence level. Shows that the Adjustment Mechanism Processes in the long-term balance lasts for 20 months. Keywords: 1. ECM 2. Hang Seng Index 3. IHSG 4. Stock Market Capitalization 5. World Gold Prices 6. World Oil Prices

Measuring the Impact of Bank Deposit Mobilisation on the Growth of the Nigerian Economy

This study explores the effects of bank deposits on Nigeria's economic growth for the period 1985 to 2020. The specific objectives are to establish the impact of commercial and merchant bank deposits on Nigeria's economic growth. The ex-post facto research design was employed. We carried out preliminary tests (unit root and descriptive) and diagnostic tests (autocorrelation, heteroscedastic, normality, CUSUM, etc.). Estimation was done with the autoregressive distributed lag model technique. It was found that bank deposits had a long-run relationship with economic growth and that the error correction term is significant and negatively signed. Thus, we recommended, amongst others, that a substantial share of bank deposits should be directed to the real sectors of the economy like agriculture and manufacturing, as this will act as an economic growth enabler.

한국의 신재생에너지 소비와 수출의 동태적 인과성에 관한 연구

The purpose of this study was to analyze the long- and short-term effects of Korea's new renewable energy consumption (NREC) on exports and the dynamic causality between the variables, which were not covered in previous studies. The summary of the results of this study is as follows. First, all variables were statistically significant in the long-term equilibrium relationship analysis. In detail, a 1% increase in world economy activity (WEA) and oil price (OILP) increased Korean exports (KEX) by 1.391% to 1.466% and 0.361%, respectively, while a 1% increase in NREC increased exports by 0.217% to 0.260%. On the other hand, a 1% increase in the Korean real effective exchange rate (KREER) was found to reduce exports by 0.275% to 0.301%. Second, it was found that changes in the WEA and NREC are important in the short-term equilibrium equation. Additionally, the error correction term with an adjustment speed of approximately 40% per month from imbalance to balance was statistically significant as a negative sign. Third, it was analyzed that the KEX have causality with the WEA and NREC, while the WEA, OILP and NREC have causality with the KEX in the long- and short-term. Also, the bidirectional causality could be confirmed in the relationship from the KEX to NREC, from the WEA to KEX and from the OILP to WEA. As a result, policies to enhance the availability of the NREC along with Korea's efforts to reduce greenhouse gas emissions and thereby improve of national energy efficiency will facilitate in the achievement of a continuous increase in exports and economic growth.

FISCAL POLICY AND SECTORAL GROWTH IN PAKISTAN

Main objective to write this paper was to find out impact of fiscal policy on sectoral growth in Pakistan. Annual data for period 1980-2021 was used from world development indicators of World Bank (2021). ADF and PP unit root test were employed to check the stationarity of all variables. ADRL bound testing was considered as estimation technique because some variables were stationary at level and some were at first difference while no variable was stationary at second difference. Three models were estimated where dependent variables were agriculture, industry and services while independent variables were GDP per capita, total debt services, external balance on goods and services, and gross national expenditures. These most repeated variables are selected from existing empirical literature on impact of fiscal policy over economic growth. All variables related to fiscal policy affected agricultural sector positively and insignificantly except total debt services that has positive and significant impact on agricultural sector. GDP per capita, inflation and total debt services have positive and significant effect on industrial sector while this sector was affected negatively and significantly by external balance of goods and services and gross national expenditures. All explanatory variables showed negative and significant association with services sector except total debt services that has positive and significant relationship with services sector. The error correction terms for agricultural, industrial and services sectors respectively are negative (-3.185, -1.674 and -2.110 respectively) indicated that the system was stable and converged to the equilibrium track following a disturbance. All diagnostic and stability tests satisfied the basic requirements of model suitability. Keywords: Fiscal Policy, GDP, Agriculture, Industry, Services, Inflation

THE AGRICULTURAL SECTOR AND NIGERIA’S ECONOMIC GROWTH: A VECTOR ERROR CORRECTION MODEL APPROACH

The study examined the impact of agriculture on Nigeria’s economic growth, using the vector error correction model approach. Secondary data were obtained from the Central Bank of Nigeria, FAOSTAT and National Bureau of Statistics between 1981 and 2019. Descriptive statistics, Augmented Dickey Fuller test for unit roots, Johansen test for co-integration test and vector error correction model were used. Pre-estimation test showed that variables were I(1); foreign direct investment to the agricultural sector had the highest coefficient of variation (2.50), with the least mean (N18,797.33) and gross domestic product had the least coefficient of variation (0.54). Both trace and maximum statistics of Johansen’s co-integration test showed that the variables had long-run relationship. Of the four optimal lag selection criteria used, the FPE, HQIC and SBIC recommended one lag. The chi-square statistics (1674.845, p<0.01) for the overall co-integrating equations confirmed long-run relationship. Findings also showed that the z-statistics (-15.19) of lnagdp was statistically significant (p<0.01) implying it would increase economic growth in the long-run. Similarly, the z statistic (-4.33) of lnnoe was statistically significant (p < 0.01) and would increase economic growth in the long-run. Also, the z-statistic (-5.89) of lnfdia was statistically significant (p<0.01), and would increase economic growth in the long-run. However, the z-statistics (5.56) of lnnoi (3.3) was positive and statistically significant (p<0.01) implying that it would reduce economic growth in the long-run. The error correction term (-0.2361) suggested that the long run equilibrium would be normalized back if there was any shock to the economic system; and that the speed of adjustment would be 23.61% annually towards equilibrium if the system is distorted. The study concluded that agriculture would be relevant to Nigeria’s economy in the long run. Consequently, efforts to attract foreign direct investment to the agricultural sector, increase growth in agricultural GDP and non-oil export and cut in non-oil import, should be sustained by the federal government.