FDI, Trade Inflows From China And Their Effects On Agricultural Development In Nigeria

Agricultural sector is seen as an engine that contributes to the growth of the overall economy of Nigeria, despite several government efforts the sector is still characterized with low yields, low level of inputs and limited areas under cultivation due to government dependence on mono-agricultural economy based on oil. However, in any developing country like Nigeria, the perspective of a modern agriculture is about meeting society's food needs, therefore upgrading from traditional system of agriculture into one with modern practice systems, financing is required and Foreign Direct Investment (FDI) is seen as a viable tool that will help address this challenge. So the significances of this study are great both empirically and theoretically.This study attempts to evaluate the impacts of FDI, trade inflows from China and their effects on agricultural sector development in Nigeria between the periods of1980-2009, the time series data used was sourced from Central Bank of Nigeria statistical bulletin, National Bureau of Statistics China and UNCTAD. In analyzing the variables Vector Auto Regression VAR model was used employing a three-step procedure. The Unit root test was conducted using the Augmented Dickey Fuller (ADF) and Philips-Parron (PP), the result indicate that there is a strong evidence of stationarity between the variables employed. Johansen and Juselius multivariate Cointregration test indicate that there is a present of cointregration, suggesting that there is a long-run relationship between the seven (7) variables. The Granger Causality test result shows that Government expenditure (GE) and Exchange Rate (ER) has a unidirectional relationship with Agricultural output (AG) while Nigeria-China bilateral trade volume (TV) and Gross Domestic Product (GDP) has a bi-directional relationship with Agricultural output (AG) also the result shows that Labour Force (LF) and China foreign direct investment inflow into Nigeria (FDI) has no causal relationship with agricultural output. From these findings, it is recommended that in order to boost agricultural output and develop the sector as a whole, more FDI should not only be sourced, there is a need for the government to provide legal and administrative quality framework for effective privatization, encourage more exportation of agricultural output as this in turn will enhance external foreign exchange earnings and improve the competitiveness of Nigeria agricultural produce in the international market. The content of this thesis is as follows; chapter1consists of the background of the study, chapter2contains theoretical base and literatures review, while chapter3presents the overview of the current situation of agricultural sector development in Nigeria. Chapter4explains the economic trade relations between China and Nigeria. Chapter5contains the empirical analysis and results while conclusion and policy recommendation are presented in chapter6.