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Foreign direct investment and exchange rate movement effects of agricultural growth: evidence from Cameroon (1978-2014)

Author

Listed:
  • Djomo, R.F.
  • Ukpe, U.H.
  • Nwalem, M.P.
  • Egbeadumah, M.O.
  • Innocent-Ene, E.O.
  • Ewung, B.F.

Abstract

This study analysed the effects of foreign direct investment (FDI) and exchange rate movement on agricultural growth in Cameroon (1978-2014). The results revealed that in the long run, a unit increase in foreign direct investment (FDI) in the previous year led to increase in agricultural growth by 0.15 while a unit increase of exchange rate in the previous year led to decrease in agricultural growth by 1.18. There was bidirectional causality between exchange rate and agricultural growth. The results further revealed that exchange rate (EX) accounted for more 10.06% in the short run, to agricultural growth while foreign direct investment (FDI) accounted the more 24.71% in the long run to agricultural growth. The results also revealed that a unit shock of foreign direct investment (FDI) accounted for a negative response of agricultural growth (AGR) (-0.023) and (-0.025) in the short and long run respectively while a unit shock of exchange rate (EX) accounted for a positive response of agricultural growth (AGR) (0.025) and (0.023) in the short and long run respectively. It was recommended that policy should be directed towards the implementation of a favourable exchange rate that will attract foreign investors in order to sustain the growth of agriculture.

Suggested Citation

  • Djomo, R.F. & Ukpe, U.H. & Nwalem, M.P. & Egbeadumah, M.O. & Innocent-Ene, E.O. & Ewung, B.F., 2017. "Foreign direct investment and exchange rate movement effects of agricultural growth: evidence from Cameroon (1978-2014)," Nigerian Journal of Agricultural Economics, Nigerian Journal of Agricultural Economics, vol. 7(1), October.
    • Handle: RePEc:ags:naaenj:268447
    DOI: 10.22004/ag.econ.268447
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    References listed on IDEAS

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    1. Samuel Fambon, 2013. "Foreign Capital Inflow and Economic Growth in Cameroon," WIDER Working Paper Series wp-2013-124, World Institute for Development Economic Research (UNU-WIDER).
    2. Fambon, Samuel, 2013. "Foreign Capital Inflow and Economic Growth in Cameroon," WIDER Working Paper Series 124, World Institute for Development Economic Research (UNU-WIDER).
    3. Mr. Dhaneshwar Ghura, 1997. "Private Investment and Endogenous Growth: Evidence From Cameroon," IMF Working Papers 1997/165, International Monetary Fund.
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