Effect of Crude Oil Price on Agricultural Productivity in Nigeria (1981-2010)

Abstract

This study examined the effects of crude oil price on agricultural productivity in Nigeria between 1981 and 2010. Agricultural productivity (proxy as agricultural GDP) was specified as a function of factors such as exchange rate, crude oil price, capital stock, labour, land and fertilizer. Quantitative estimates, based on Augmented-Dickey Fuller (ADF) unit root test, Co-integration and Error Correction modelling, indicate that the exchange rate, capital, labour and trend are the major determinants of agricultural productivity in the long-run, while price of crude oil price is the most important determinant of agricultural productivity in the short–run. The results further show that the error correction mechanism (ECM) indicated a feedback of about 112.5% of the previous year’s disequilibrium from long-run domestic agricultural production.

Keywords: Agricultural productivity, crude oil price, error correction, co-integration.