An Evaluation and Forecast of the Impact of Foreign Direct Investment in Nigeria’s Agriculture Sector in A VAR Environment

Abstract

This study evaluated and forecasted the impact of FDI in the agricultural sector from 1980-2007, specifically its impact on agricultural output and labor in a Vector Auto Regression (VAR) environment. Data used in this study were sourced from Central Bank of Nigeria (CBN) statistical bulletin (2009). Results from the analysis revealed that FDI in the period under review had no significant impact on agricultural output.  In addition, results of the forecast estimates showed that the current volume of FDI would not significantly affect agricultural output but will have significant positive impact on labor (employment generation).  This study recommended for increase in the volume of FDI and advised government and other stakeholders to seek FDI that will improve existing or introduce new technology in the agricultural sector and enhance domestic capacity or domestic investment, even if the opportunity cost of a reduction in labor may have to be paid.

Keywords: Agriculture; FDI; Nigeria; SAP; VAR.