Abstract: Agriculture is known as the engine and panacea for economic growth in most developing nations
of the world. As once asserted by Nobel laureate in economics Gunner Myrdal "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 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). |