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Effects of Trade Liberalization and Exchange Rate Changes on Prices of Carbohydrate Staples in Nigeria

Author

Listed:
  • A.I Achike
  • M. Mkpado
  • C.J. Arene

    (University of Nigeria, Nsukka, Nigeria)

Abstract

A number of government programmes and projects aimed at increasing domestic food crops production have not yielded the desired result, despite the fact that the agricultural sector employs the largest labour force in Nigeria. This study examines the effects of trade liberalization and exchange rate changes on carbohydrate staples in Nigeria. The need to determine the effi ciency of resource use in the production of carbohydrate food crops and the effectiveness of protection conferred on local producers by quantitativerestriction and tariff structures motivated this study. Secondary data, published from 1974 to 2006, on cassava exports and rice imports, as well as non-tradeable carbohydratestaples, were used. It is hypothesized that exchange rate changes and trade liberalization, via price relatives, trade intensity and nominal protection coeffi cient have not affected prices of carbohydrate staples in Nigeria. The hypothesis is tested with results of empirical data analysed using appropriate econometric techniques. Results show that the effects of trade liberalization on prices of non-tradeable carbohydrate staples are mixed. Trade liberalization accounts for most changes in the price of non-tradeable rice than other crops. World prices positively affected the prices of maize and non-tradeable rice which is the only crop the exchange rate changes had a positive effect on its price. The intensifi cation of liberalization exercise, from the removal of quantitative restriction to use of tariff, among other recommendations, should be encouraged because it can be a remedy to the negative impact of increase in the trade intensity and erosion of nominal protection coeffi cient on prices of the non-tradeable crops

Suggested Citation

  • A.I Achike & M. Mkpado & C.J. Arene, 2013. "Effects of Trade Liberalization and Exchange Rate Changes on Prices of Carbohydrate Staples in Nigeria," Working Papers 256, African Economic Research Consortium, Research Department.
    • Handle: RePEc:aer:wpaper:256
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    References listed on IDEAS

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