Oil price movements and agricultural production from heterogeneous sub-sectors: Analysing the Dutch disease in an African resource-rich economy

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Ike G. N., USMAN O., KÖKSAL C.

Natural Resources Forum, 2023 (SCI-Expanded) identifier

  • Yayın Türü: Makale / Tam Makale
  • Basım Tarihi: 2023
  • Doi Numarası: 10.1111/1477-8947.12343
  • Dergi Adı: Natural Resources Forum
  • Derginin Tarandığı İndeksler: Science Citation Index Expanded (SCI-EXPANDED), Social Sciences Citation Index (SSCI), Scopus, Academic Search Premier, International Bibliography of Social Sciences, PASCAL, Agricultural & Environmental Science Database, Aquatic Science & Fisheries Abstracts (ASFA), CAB Abstracts, Environment Index, Food Science & Technology Abstracts, Geobase, Greenfile, Pollution Abstracts, Public Affairs Index, Veterinary Science Database
  • Anahtar Kelimeler: African resource-rich economy, agricultural production, Dutch disease, dynamic ARDL simulations, oil price fluctuations
  • İstanbul Ticaret Üniversitesi Adresli: Evet

Özet

The economy of a developing country like Nigeria has evolved from a strong dependence on agricultural exports in the 1960s to an unhealthy reliance on crude oil exports. This has led to a large agricultural trade deficit that requires a better understanding of the dynamic relationship between oil price booms and agricultural production. To this end, the study not only isolates the effect of oil price movements on agricultural production from heterogeneous sub-sectors in Nigeria but also tests for Dutch disease symptoms using annual data from 1970 to 2019. Employing the auto-regressive distributed lag (ARDL) cointegration and dynamic simulations as well as dynamic Granger causality techniques, the study shows that in the long run, oil price booms affect the food sector and the livestock sector heterogeneously. An increase in the oil price undercuts the production performance of the food sector. Also, because of the strong linkage between domestic livestock production and the global livestock market, an increase in domestic production has a weak predictive content for oil price booms. The policy implications of these findings include the sterilization of oil revenues outside the country and collaboration with foreign investors to provide much-needed investment in the agricultural sector through various incentive schemes.