Foreign Direct Investment and Agricultural Output for Food Security in Nigeria

Ogunbadejo H. K^1*, Oladipo A.E.¹ and Zubair A.²

¹Nigerian institute for oceanography and marine research Vitoria Island Lagos, Nigeria

²Postgraduate school, University of Lagos, Lagos Nigeria.

Accepted February 12, 2018

Agriculture is known as the engine and panacea for economic growth in most developing nations of the world. As once asserted by Karl Gunner Myrdal, the Nobel Laureate in Economics “The battle for long-run economic growth is either won or lost in the agricultural sector”. This study empirically examines the effect of Foreign Direct Investment (FDI) on agricultural output for food security in the Nigerian economy. The study is conducted using annual time series data running from 1980 to 2014. The study employs Johansen Cointegration Test, over parameterized and error correction model (ECM) as the estimation techniques. The results of the study reveals that Agricultural output, Foreign Direct Investment, Interest rate, Labour employment, Primary School Enrolment and Foreign Exchange rate have a long-run equilibrium relationship according to the Johansen cointegration test, whereas, the ECM result shows that the speed of adjustment of the variables towards their long-run equilibrium path was low, estimated as 29.09%. Based on the empirical outcomes of the result obtained, the following recommendations were offered: Firstly, more FDI to be sought for the agricultural sector of Nigeria with focus on to improve existing or introduce new technology in the agricultural sector and enhance domestic capacity or domestic investment. Secondly, the government should also work at stabilizing the local currency (naira), the depreciation of which has made farming inputs very expensive (as they are imported).

Key words: Agricultural output, Foreign Direct Investment (FDI) Cointegration, Error correction model (ECM).

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