Agricultural Export, Oil Export and Economic Growth in Nigeria: Multivariate Co-integration Approach

Exportation has long being considered as a part of the factors that improve economic growth, therefore making the importance of export promotion a debatable study in economic growth and development’s literatures. However nations employ different ways and policies that will enable economies to grow through the import substitution and export promotion. There are numerous countries such as Nigeria that have embraced the export strategy as a main tool for economic growth. Nigeria being regarded as an oil based economy, exports most of the oil production; that accounts for around 4 percent of the global oil production. The country rely on the revenues generated from this sector to improve the economy, thereby paying less consideration on other sectors that can likewise be of use such as agricultural sector.

 Agriculture is an importanteconomic sector influencing the basis industrial growth and development of most economies in the world. This sector is also being regarded as the engine of growth and development by most nations likewise oil sector in cases of countries with abundance of oil. Therefore improvement of major sartorial aspect that contributes to nations’ economy can help in poverty alleviation of most thirdworld countries. Similarly, recent studies on the cause of growth and development have being identifying sartorial transformation of most nations as way for their economic liberation. Nigeria as a country considered in this study has its major foreign income from non-oil exports during last decade before pattern changed when oil suddenly became of crucial position in the world economy as shown in Table 1.

Table 1 show the percentage contribution of oil and non-oil exports to total export.Oil export remains the foremost contributor, upholding its dominant role and trend in the economy. However, agricultural exports show a low input to the total exports of the country compared to what it used to be(CBN, 2015). 

In the 1960s, agriculture was the main stay of the economy and the greatest foreign exchange earner. Agricultural products constitute the bulk of Nigeria’s non-oil exports. The shares of these products both processed and unprocessed in total value of non-oil exports is as high as 70 per cent (CBN, 2011). The agricultural commodities market experienced an export boom between 1960 and 1970 but declined in the early 1980s as a result of the fall in international primary commodity markets associated with deterioration in the terms of trade. This however weakens the international demand for Nigeria’s agricultural exports.Since then, the economy has been depending on proceeds from oil that constitutes 90 percent of foreign exchange earnings in total (Okoh, 2004). 

The performance of agricultural export in the past three decades leaves little or nothing desirable in spite of the efforts to promote non-oil exports in Nigeria. For these reasons if Nigerian economy is to be returned to the path of sustainable growth and external viability indeed, there is the need for a change in the policy focus and a movement to the industrialization sector. Thus raising the question of the function of the agricultural export in the economic growth of the country.In this light, the paper is to further empirically analyze the existence and way of causality between oil, agriculture export and economic growth. Furthermore, this study also determines the long run relationship between the selected sectorial exports and economic growth in Nigeria.