Deregulation and Macroeconomic Drivers Of Foreign Direct Investment In Nigerian Agriculture (1970 -2009): An Econometric Analysis

Abstract

This study used secondary data from Central Bank of Nigeria and National Bureau of Statistics to ascertain the determinants of Foreign Direct Agricultural Investment (FDAI) in Nigeria from 1970 to 2009. After attempting modeling the determinants of FDAI with untransformed OLS regression model, autocorrelation was detected, hence Praise-Winston model was applied. The series' residuals were subjected to appropriate econometric tests and met the major requirements for running OLS models in addition to being cointegrated at I(0) using ADF and Philip Perron indicators. The model's fitness test indicated an R2 of 60% with an F-statistic significant at p<0.01. The study showed that foreign exchange and the economic deregulation policy of Nigerian government which started in 1986 were the most significant macro-economic drivers of FDAI in Nigerian economy over the review period. The findings call for improved management of the foreign exchange regimes by the Central Bank of Nigeria; tightening of fiscal discipline through increased transparency and removal of other structural impediments against the successful implementation of the economic reforms by the government (especially poor power supply among others).

Key Words: Foreign direct investment, agriculture, deregulation of Nigerian economy and economic growth.