Determinants, efficiency and potential of agri-food exports from Nigeria to the EU: Evidence from the stochastic frontier gravity model

https://doi.org/10.17221/15/2021-AGRICECONCitation:

Abdullahi N.M., Aluko O.A., Huo X. (2021): Determinants, efficiency and potential of agri-food exports from Nigeria to the EU: Evidence from the stochastic frontier gravity model. Agric. Econ. – Czech, 67: 337–349.

download PDF

This study uses an extended gravity model to examine the determinants, efficiency and potential of agri-food exports from Nigeria to the EU for the 1995–2019 period. It uses a stochastic frontier analysis (SFA) to estimate the extended gravity model. The results show that the economic size (GDP) of Nigeria and the EU countries, as well as bilateral distance, positively determine agri-food exports from Nigeria to the EU. Also, the results show that Nigeria's agri-food exports to the EU are negatively determined by the income (per capita GDP) of Nigeria and its EU trading countries, bilateral exchange rate and EU new member states (NMS). The results further show that Nigeria scores relatively low in terms of the efficiency of its agri-food exports to the EU countries. On a final note, the study shows that Nigeria's agri-food exports with the EU have a relatively large potential that has not been exploited. We document policy recommendations in this study.

References:
Aigner D., Lovell C.A.K., Schmidt P. (1977): Formulation and estimation of stochastic frontier production function models. Journal of Econometrics, 6: 21–37. https://doi.org/10.1016/0304-4076(77)90052-5
 
Anderson J.E. (1979): A theoretical foundation for the gravity equation. The American Economic Review, 69: 106–116.
 
Assem A.H., Romstad E., Huo X. (2010): Determinants of Egyptian agricultural exports: A gravity model approach. Modern Economy, 1: 134–143. https://doi.org/10.4236/me.2010.13015
 
Atif R.M., Haiyun L., Mahmood H. (2016): Pakistan's agricultural exports, determinants and its potential: An application of stochastic frontier gravity model. The Journal of International Trade & Economic Development, 26: 257–276.
 
Balogh J.M., Leitão N.C. (2019): A gravity approach of agricultural trade: The nexus of the EU and African, Caribbean and Pacific countries. Agricultural Economics – Czech, 65: 509–519. https://doi.org/10.17221/131/2019-AGRICECON
 
Barma T. (2017): Efficiency of India's agricultural exports. South Asia Economic Journal, 18: 276–295. https://doi.org/10.1177/1391561417713130
 
Battese G.B., Coelli T.J. (1988): Prediction of firm-level technical efficiencies with generalised frontier production function and panel data. Journal of Econometrics, 38: 387–399. https://doi.org/10.1016/0304-4076(88)90053-X
 
Belotti F., Daidone S., Ilardi G. (2013): Stochastic frontier analysis using stata. The Stata Journal, 13: 719–758. https://doi.org/10.1177/1536867X1301300404
 
Braha K., Qineti A., Cupák A., Lazorčáková E. (2017): Determinants of Albanian agricultural export: The gravity model approach. Agris On-line Papers in Economics and Informatics, 8: 3–21. https://doi.org/10.7160/aol.2017.090201
 
Castillo J.S., Villanueva E.C., García-Cortijo M.C. (2016): The international wine trade and its new export dynamics (1988–2012): A gravity model approach. Agribusiness, 32: 466–481. https://doi.org/10.1002/agr.21463
 
CEPII (2020): Research and Expertise on the World Economy Database. CEPII. Available at http://www.cepii.fr/CEPII/fr/bdd_modele/bdd_modele.asp (accessed Dec 14, 2020).
 
Choi C. (2002): Linder hypothesis revisited. Applied Economics Letters, 9: 601–605. https://doi.org/10.1080/13504850110111234
 
Crescimanno M., Galati A., Yahiaoui D. (2013): Determinants of Italian agri-food exports in non-EU mediterranean partner countries: An empirical investigation through a gravity model approach. New Medit, 4: 46–54.
 
Ding C., Gummi U.M., Lu S.B., Muazu A. (2020): Modelling the impact of oil price fluctuations on food price in high and low-income oil exporting countries. Agricultural Economics – Czech, 66: 458–468. https://doi.org/10.17221/197/2020-AGRICECON
 
Dreyer H. (2014): Misaligned distance: Why distance can have a positive effect on trade in agricultural products. In: Proceedings Annual Meeting of the Agricultural & Applied Economics Association's AAEA, Minneapolis, MN, US, July 27–29, 2014: 1–18.
 
EU Portal (2020): The 27 member countries of the EU. EU Portal. Available at https://europa.eu/european-union/about-eu/countries_en (accessed Dec 14, 2020).
 
European Commission (2017): Putting Partnership into Practice: Trade Economic Partnership Agreements (EPAs) between the EU and African, Caribbean and Pacific (ACP) Countries. European Commission. Available at http://trade.ec.europa.eu/doclib/docs/2017/october/tradoc_156340.pdf (accessed Dec 13, 2020).
 
European Commission (2019a): Agri-Food Trade Statistical Factsheet: European Union – Nigeria. European Commission. Available at https://ec.europa.eu/info/food-farming-fisheries (accessed Nov 10, 2020).
 
European Commission (2019b): Overview of Economic Partnership Agreements. European Commission. Available at https://ec.europa.eu/trade/policy/countries-and-regions/development/economic-partnerships/ (accessed Dec 10, 2020).
 
Greene W. (2005): Reconsidering heterogeneity in panel data estimators of the stochastic frontier model. Journal of Econometrics, 126: 269–303. https://doi.org/10.1016/j.jeconom.2004.05.003
 
Igue N.N., Ogunleye T.S. (2014): Impact of real exchange rate on trade balance in Nigeria. African Development Review, 26: 347–358. https://doi.org/10.1111/1467-8268.12086
 
Jambor A., Balogh J., Kucsera P. (2016): Country and industry specific determinants of intra-industry agri-food trade in the baltic countries. Agricultural Economics – Czech, 62: 280–291. https://doi.org/10.17221/153/2015-AGRICECON
 
Kalirajan K. (2007): Regional cooperation and bilateral trade flows: An empirical measurement of resistance. The International Trade Journal, 21: 85–107. https://doi.org/10.1080/08853900701266555
 
Kea S., Li H., Shahriar S., Abdullahi N.M., Phoak S., Touch T.(2019): Factors influencing Cambodian rice exports: An application of the dynamic panel gravity model. Emerging Markets Finance and Trade, 55: 1–22. https://doi.org/10.1080/1540496X.2019.1673724
 
Linder S.B. (1961): An Essay on Trade and Transformation. Stockholm, Almqvist & Wiksell/New York, J. Wiley: 1–167.
 
MBNP (2017): Economic Recovery & Growth Plan 2017–2020. Abuja, Nigeria, Ministry of Budget & National Planning: 1–140.
 
Meeusen W., Van Den Broeck J. (1977): Efficiency estimation from Cobb-Douglas production functions with composed error. International Economic Review, 18: 435–444. https://doi.org/10.2307/2525757
 
NBS (2020): Nigerian Gross Domestic Product Report. Abuja, Nigeria, National Bureau of Statistics. Available at https://nigerianstat.gov.ng/elibrary (accessed Dec 13, 2020).
 
Noubissi E., Njangang H. (2020): The impact of terrorism on agriculture in African countries. African Development Review, 32: 730–743. https://doi.org/10.1111/1467-8268.12474
 
Onogwu G.O. (2014): Determinants of the intra-industry trade in cereal and miscellaneous edible preparations: The evidence for Nigeria and the ECOWAS partners. Agricultural Economics – Czech, 60: 21–30. https://doi.org/10.17221/18/2013-AGRICECON
 
Osabuohien E.S., Efobi U.R., Odebiyi J.T., Fayomi O.O., Salami A.O. (2019): Bilateral trade performance in West Africa: A gravity model estimation. African Development Review, 31: 1–14. https://doi.org/10.1111/1467-8268.12359
 
Owoo N.S. (2020): Demographic considerations and food security in Nigeria. Journal of Social and Economic Development, 23: 128–167. https://doi.org/10.1007/s40847-020-00116-y
 
Ravishankar G., Stack M.M. (2014): The gravity model and trade efficiency: A stochastic frontier analysis of Eastern European countries' potential trade. The World Economy, 37: 690–704. https://doi.org/10.1111/twec.12144
 
Ruggiero J. (2007): A comparison of DEA and the stochastic frontier model using panel data. International Transactions in Operational Research, 14: 259–266. https://doi.org/10.1111/j.1475-3995.2007.00585.x
 
Sapa A., Droždz J. (2019): Polish agri-food trade with non-EU countries – A gravity model analysis. Annals of the Polish Association of Agricultural and Agribusiness Economists, 11: 403–412. https://doi.org/10.5604/01.3001.0013.6006
 
Sevela M. (2002): Gravity-type model of Czech agricultural export. Agricultural Economic – Czech, 48: 463–466. https://doi.org/10.17221/5353-AGRICECON
 
Shahriar S., Lu Q., Sokvibol K. (2019): Determinants of exports in China's meat industry: A gravity model analysis. Emerging Markets Finance and Trade, 55: 2544–2565. https://doi.org/10.1080/1540496X.2019.1578647
 
Time and Date (2020): Distance Calculator Database. [Dataset]. Time and Date AS 1995–2021. Available at https://www.timeanddate.com/worldclock/distance.html (accessed Sept 6, 2020).
 
Tinbergen J. (1962): Shaping the world economy. The International Executive, 5: 27–30. https://doi.org/10.1002/tie.5060050113
 
UNCTAD (2020): Data Center of the United Nations Conference on Trade and Development. [Dataset]. UNCTAD. Available at https://unctadstat.unctad.org/wds/ReportFolders/reportFolders.aspx (accessed Sept 5, 2020).
 
Verter N. (2016): Cocoa export performance in the world's largest producer. Bulgarian Journal of Agricultural Science, 22: 713–721.
 
Verter N., Bečvářová V. (2016): The impact of agricultural exports on economic growth in Nigeria. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 64: 691–700. https://doi.org/10.11118/actaun201664020691
 
Verter N., Zdráhal I., Bečvářová V., Grega L. (2020): Products mapping' and trade in agri-food products between Nigeria and the EU28. Agricultural Economics – Czech, 66: 34–45. https://doi.org/10.17221/145/2019-AGRICECON
 
World Bank (2020): Database of The World Bank: World Development Indicators. [Dataset]. World Bank. Available at https://data.worldbank.org/indicator/TX.VAL.MRCH.XD.WD?end=2018&start=1990 (accessed Nov 4, 2020).
 
Westerlund J., Wilhelmsson F. (2011): Estimating the gravity model without gravity using panel data. Applied Economics, 43: 641–649. https://doi.org/10.1080/00036840802599784
 
Zdráhal I., Verter N., Daňková B., Kuchtík J. (2019): Products mapping' and agri-food trade between Nigeria and ECOWAS member countries. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 67: 1379–1392. https://doi.org/10.11118/actaun201967051379
 
download PDF

© 2021 Czech Academy of Agricultural Sciences | Prohlášení o přístupnosti