Foreign direct investment and exchange rate movement effects of agricultural growth: evidence from Cameroon (1978-2014)

R.F. Djomo, U.H. Ukpe, M.P. Nwalem, M.O. Egbeadumah, E.O. Innocent-Ene and B.F. Ewung

Nigerian Journal of Agricultural Economics, 2017, vol. 07, issue 01

Abstract: This study analysed the effects of foreign direct investment (FDI) and exchange rate movement on agricultural growth in Cameroon (1978-2014). The results revealed that in the long run, a unit increase in foreign direct investment (FDI) in the previous year led to increase in agricultural growth by 0.15 while a unit increase of exchange rate in the previous year led to decrease in agricultural growth by 1.18. There was bidirectional causality between exchange rate and agricultural growth. The results further revealed that exchange rate (EX) accounted for more 10.06% in the short run, to agricultural growth while foreign direct investment (FDI) accounted the more 24.71% in the long run to agricultural growth. The results also revealed that a unit shock of foreign direct investment (FDI) accounted for a negative response of agricultural growth (AGR) (-0.023) and (-0.025) in the short and long run respectively while a unit shock of exchange rate (EX) accounted for a positive response of agricultural growth (AGR) (0.025) and (0.023) in the short and long run respectively. It was recommended that policy should be directed towards the implementation of a favourable exchange rate that will attract foreign investors in order to sustain the growth of agriculture.

Keywords: Agricultural and Food Policy; Agricultural Finance; International Relations/Trade (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:ags:naaenj:268447

DOI: 10.22004/ag.econ.268447

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