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EXCHANGE RATE EFFECTS: A CASE STUDY OF THE EXPORT PERFORMANCE OF THE NIGERIA AGRICULTURE AND FOOD SECTOR
Abstract
The Nigeria franc appreciated strongly against the currencies of Nigerian’s most important trading partners after the global financial crisis in 2008. This has raised the question of how sensitive Nigeria exports are with respect to exchange rate movements. We analyze this question for exports of the Nigeria Agriculture and Food Sector, using both time series and dynamic panel data models based on data from 1999 to 2012. We find that in the long-run a one percent appreciation of the Nigeria franc leads on average to a decrease in exports of agricultural and food products between 0.8 and 0.9 percent. Our results suggest that on average, producers in the Nigeria Agriculture and Food Sector are able to successfully avoid price competition by differentiating their products, producing high-quality products for niche markets.
Keywords: exchange rate, exports, agriculture and food sector, time series analysis, panel data models