IIARD International Institute of Academic Research and Development

INTERNATIONAL JOURNAL OF ECONOMICS AND FINANCIAL MANAGEMENT (IJEFM )

E-ISSN 2545-5966
P-ISSN 2695-1932
VOL. 10 NO. 1 2025
DOI: 10.56201/ijefm.v10.no1.2025.pg1.13

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Impact of FDI to Manufacturing Industry on Agricultural Production in Nigeria

Sajo Sani Alhaji, Amade Peter

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Abstract

This study examines the impact of foreign direct investment (FDI) in Nigeria's manufacturing sector on agricultural production, using data from 1981 to 2023. Agricultural production, measured by value-added activities like forestry, fishing, crop cultivation, and livestock, was the dependent variable, while independent variables included manufacturing sector FDI, legal institutions, exchange rates, and inflation. Unit root tests (ADF and Phillips-Perron) and the ARDL model were used for analysis. Results showed that manufacturing sector FDI had a positive but insignificant short-run effect on agricultural production, becoming significant in the long run. Legal institutions positively influenced agriculture in both the short and long term, while exchange rates and inflation negatively impacted agriculture in the short run. Key recommendations included reducing the cost of imported agricultural inputs, creating a favorable environment for manufacturing sector FDI through incentives and infrastructure improvements, securing land tenure, protecting investor rights, and increasing investments in agricultural development through improved access to credit, modern techniques, and infrastructure.

keywords:

Manufacturing industry, Legal institution, Agricultural production and Exchange rate

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