IMPACT OF ECONOMIC OPENNESS ON RICE PRODUCTION IN NIGERIA (1993 – 2023)

Abstract

The study examined the trend of economic openness and rice production in Nigeria from 1993 to 2023, and investigated the impact of economic openness on rice production using Johansen cointegration, long-run Fully Modified OLS (FMOLS) regression and Vector Error Correction Modelling (VECM). Annual secondary time-series data for 12 variables were sourced from the CBN, NBS, World Bank, FAO, and NIMET. Augmented Dickey-Fuller (ADF) and Phillips-Perron (PP) unit root tests confirmed universal I(1) integration across all variables. The Degree of Economic Openness (DEO) was the most strongly cointegrated variable (Trace = 545.73; Max-Eigen = 246.89), confirming it as a fundamental structural determinant of rice production. The long-run regression (R² = 0.799; F = 7,936.31) revealed that DEO (0.017), rural population (0.333), imported rice price (0.395), domestic rice price (0.848), land area (0.264), labour freedom index (0.231), property rights index (0.614), FDI (0.013), exchange rate (0.091), tariff rate (0.615), rainfall (0.430) and GDP growth rate (0.492) all exert positive and statistically significant long-run effects on rice production. VECM confirmed 12% per-period equilibrium adjustment (ECT = 0.120; t = 8.37). The null hypothesis is rejected at 5% level of significance. The study concluded that economic openness is a fundamental structural determinant of Nigeria’s rice production. Graduated trade liberalisation, scaling of the Anchor Borrowers’ Programme, rural infrastructure investment and exchange rate stabilisation were recommended in order to promote rice production in Nigeria.