Trade Openness and the Implications for Agricultural Output in Nigeria

Abstract

Trade policy is a major determinant of agricultural output in Nigeria which is considered as one of the many ways through which the nation’s economy could grow. Agricultural sector in the country is one of the sectors in which the economy has a comparative advantage, it also provides raw materials for the teeming industries in the country. Hence the objective of the study was to investigate the relationship that exists between trade openness and agricultural output in Nigeria. The study entailed the acquisition of time series data from the statistical bulletin of the Central Bank of Nigeria. The results of the unit root test showed all variables in the model were nonstationary at their levels but integrated at first-order, denoted as I(1). However, the study revealed that the agriculture raw materials import and real effective exchange rate exert a positive effect on agricultural value added, while agriculture raw material import is significant effect at 10% level, the real effective exchange rate is insignificant in the short run. Based on the findings, it is suggested that the policymaker should pay attention deeply into agricultural sector and increase the annual budget for agricultural sector in Nigeria, the concerned government should empower the farmers and give out free interest loan in order to boost their agricultural product.