The Impact of Trade Liberalisation on Nigeria Agricultural Sector.

Abstract

This study attempts to examine the impact of trade liberalization on Nigeria agricultural performance (model one) with special interest on export sub-sector (model two) using time -series analysis. It is stated clearly that performance of Nigeria agricultural sector and its export sub-sector is a function of trade liberalization. In this work trade liberalization is decompose into macroeconomic variables as thus agricultural degree of openness, agricultural capital formation, agricultural export to import price ratio, real exchange rate and foreign investment on agriculture. The test on hypothesis of model one revealed that two explanatory variables (EP/IP,LOG(FIA)) are statistically significant and three variables (LOG(ADO),LOG(ACF),REXR) are not statistically significant while that of model two revealed that two explanatory variables (ADO,LOG(FIA)) are statistically significant and three variables (ACF, EP/IP,REXR) are not statistically significant having passed the rule of thumb and conventional t-criteria. The F-statistics which test the overall significant of the entire regression model revealed that the overall regression of both models are statistically significant, The Error Correction Model of Ordinary Least Square (OLS) results from the time -series analysis confirm that agricultural degree of openness and agricultural export to import price ratio were significant in the both models; whereas, agricultural capital formation, real exchange rate and foreign investment on agriculture are not significant. The Error Correction Model findings from the MODEL 2 follow the same direction as the MODEL 1. Therefore, it becomes necessary for policy makers to formulate policies that will eventually enhance investment in agricultural capital formation, real exchange rate and foreign investment on agricultural in Nigeria as this will lead to increased output and promote exportation of agricultural products.

Keywords: Agricultural Products, Trade Liberalisation, Agricultural Sector, Export, Import, Capital Formation, Gross Domestic Product, Agricultural Policy.