Department of Economics

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Author: search.filters.author.Benedict Akanegbu, NSubject: search.filters.subject.Economic growth.

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    AGRICULTURAL PRICE DISTORTIONS AND THEIR EFFECTS ON THE NIGERIAN ECONOMY
    (Progressive Academic Publishing UK, 2015-02-02) Benedict Akanegbu, N
    This research examines the effects of agricultural Price Distortions on output in the agricultural sector of Nigeria. Specifically, the study tests the hypotheses that agricultural price distortions are inversely related to output growth in the same sector. The conclusiveness of all previous studies on this problem has not been without doubt largely because their analyses were based on multi-country cross-section data and aggregate price distortion indices. The present study seeks to overcome this failing by disaggregating the price distortions sector-wise for a single country, namely, Nigeria. The study adopts a model based on a modified neoclassical production function where agricultural exports are taken as inputs. Agricultural price distortions cause a wedge between the domestic and foreign price of agricultural exports and thereby reduce the volume of trade and, in consequence, the real GNP as well. And to derive consistent, unbiased, and efficient estimators of the structural equations, the model so developed was estimated by ordinary least square (OLS) method. The analysis confirms the view that agricultural price distortions have a significant and negative influence on agricultural output. An important implication of the study is that reforms of agricultural pricing policies should constitute a major component of any remedial program designed to accelerate economic growth in a country like Nigeria. If her agricultural sector is to become modern and efficient, they should be given the opportunity and the motivation to reduce costs. Indiscriminate reduction of the rate of protection and the reduction of the implicit taxes on exports alone are not the correct or adequate solution. Better physical infrastructure, better education and training, and more modernized agricultural experience can contribute to the ability to reduce costs and raise productivity.