Trade Liberalization, Exchange Rate Changes, and the Competitiveness of Carbohydrate Staple Markets in Nigeria

Abstract

his study examined the effects of trade liberalization and exchange rate changes on carbohydrate staples in Nigeria. Secondary data published from 1974 to 2006 on cassava exports and rice imports as well as non-tradable carbohydrate staples were used. It was hypothesized that exchange rate changes and trade liberalization via price relatives, trade intensity and nominal protection coefficient have affected prices of carbohydrate staples in Nigeria. Results show that the effects of trade liberalization on prices of non tradable carbohydrate staples were mixed. Trade liberalization accounted for most changes in the price of non tradable rice than other crops. World prices positively affected the prices of maize and non tradable rice. Also increasing exchange rate will lead to increase in price of non tradable rice due to price competition with imported rice. The intensification of liberalization exercise from the removal of quantitative restriction to use of tariff, among other recommendations, should be encouraged because it can be a remedy to the negative impact of increase in the trade intensity and erosion of nominal protection coefficient on prices of the non tradable crops.