Does Foreign Direct Investments Impact Agricultural Output in Nigeria? An Error Correction Modelling Approach

Abstract

This study measures the impact of foreign direct investment on agricultural output in Nigeria. It opines that foreign direct investment is one of the viable techniques of financing development in developing countries. To achieve our objective, the study used times series data spanning a period of 34 years for several variables from credible sources. The method of analysis used was Error correction model. The study found an insignificantly positive effect of foreign direct investment on agricultural output in the short-run but found a significant effect on agricultural output in the long-run. Furthermore, the study found a significant effect of employment, exchange rate, and interest rates on agricultural output in the long-run. It is recommended that deliberate polices must be quickly enacted to reduce interest rates for farm purposes, encourage labour availability in agriculture and stabilize exchange rates within the Nigerian economy. These way foreign investors will be encouraged to import their capital for agricultural production activities now which will be a guarantee for a significant impact of foreign direct investment on agricultural output in the long run.