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Do fluctuations in exchange rate hinder non-oil export? An analysis of agriculture and manufacturing in Nigeria

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Abstract

This study examines the effect of exchange rate fluctuation on non-oil export by focusing on both manufactured exports and agriculture exports in Nigeria between 1970 and 2019. The study employs the vector error correction framework, the impulse response and variance decomposition analyses to analyse data on agriculture exports, manufacturing exports, exchange rate, interest rate, and inflation rate. Findings suggest that long run relationship exists among the variables. The vector error correction analysis reveals that exchange rate depreciation positively impacts agriculture exports but negatively impacts manufacturing exports in Nigeria. However, both the impulse response and variance decomposition analyses confirm that exchange rate fluctuation has a higher significance on manufacturing exports than agriculture exports by accounting for the largest forecast error variance in manufacturing exports than in agriculture exports over the forecast horizon. We conclude that fluctuations in exchange rate significantly impact the non-oil exports in Nigeria. Hence, to enhance the non-oil exports, government could consider enhancing the local capacity to produce for exports by reducing tariffs for manufactured inputs. They can also set up modular mechanised farms for agriculture graduates and farmers to boost agriculture exports and stabilize the exchange rate.

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The data for the study would be made available upon request from the journal editors.

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We claim responsibility for all notable flaws and the entire content.

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There is no funding received for this study.

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Authors and Affiliations

  1. School of Management and Social Sciences, Pan-Atlantic University, Lagos, Nigeria

    Ekundayo Peter Mesagan

  2. Department of Economics, Distant Learning Institute, University of Lagos, Lagos, Nigeria

    Kolawole Kushimo

  3. Department of Economics, University of Lagos, Lagos, Nigeria

    Dominic Ikoh Umar

Authors
  1. Ekundayo Peter Mesagan
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  2. Kolawole Kushimo
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  3. Dominic Ikoh Umar
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Contributions

EPM: the drafting and writing of the paper (65%). KK: data collection and analysis (20%). DIU: literature review, and editorial (15%).

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Correspondence to Ekundayo Peter Mesagan.

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Mesagan, E.P., Kushimo, K. & Umar, D.I. Do fluctuations in exchange rate hinder non-oil export? An analysis of agriculture and manufacturing in Nigeria. SN Bus Econ 1, 151 (2021). https://doi.org/10.1007/s43546-021-00156-4

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