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The Heckscher-Ohlin Model and the Performance of Cocoa Products in Nigeria

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  • Nahanga Verter

    (Faculty of Regional Development and International Studies, Mendel University in Brno, Zemědělská 1, 613 00 Brno, Czech Republic)

Abstract

The Heckscher-Ohlin model based on Ricardo's theory of comparative advantage maintains that countries should specialize in the production and exportation of products that they have relative factor endowments. Therefore, Nigeria has taken advantage of its favourable climatic condition to become among the largest producers and exporters of cocoa products in the world. Given that cocoa is also the topmost non-oil export product and earnings in Nigeria, this paper assesses its performance and determines the effects of external factors on production in the country. Nigeria's performance in the global cocoa market has been somewhat below expectations. Using OLS and Granger causality, the OLS regression results reveal that exports, trade openness, area harvested and domestic consumption have a positive influence on cocoa production in Nigeria. The Granger test shows that there exists bidirectional causality between the world price, trade openness and yield per hectare to cocoa production in the country. The results further confirmed a unidirectional causality running from cocoa output to exports. The government of Nigeria and trading partners should create a sound environment and some incentives to stimulate cocoa producers and exporters to increase production for export performance and revenue generation in the country.

Suggested Citation

  • Nahanga Verter, 2016. "The Heckscher-Ohlin Model and the Performance of Cocoa Products in Nigeria," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 64(6), pages 2161-2172.
    • Handle: RePEc:mup:actaun:actaun_2016064062161
    DOI: 10.11118/actaun201664062161
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    References listed on IDEAS

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    1. Nahanga Verter & Věra Bečvářová, 2016. "The Impact of Agricultural Exports on Economic Growth in Nigeria," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 64(2), pages 691-700.
    2. Yusuf, Sina A. & Yusuf, W.A., 2008. "Determinants of Selected Agricultural Export Crops in Nigeria: An Ecm Approach," 2007 Second International Conference, August 20-22, 2007, Accra, Ghana 52181, African Association of Agricultural Economists (AAAE).
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    5. Verter, N. & Bečvářová, V., 2014. "Analysis of Some Drivers of Cocoa Export in Nigeria in the Era of Trade Liberalization," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 6(4), pages 1-11, December.
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