Long-Run and Short-Run Relationship Between Cocoa Exports and Economic Growth in Nigeria

Abstract

This study examined the long-run and short-run relationships between cocoa exports and economic growth in Nigeria from 1970 to 2023. The study employed the Autoregressive Distributed Lag (ARDL) model to assess both short-run and long-run dynamics, with secondary data obtained from sources such as the World Bank and the International Cocoa Organization. The findings revealed that cocoa exports significantly impacted economic growth in both short and long terms. In the short run, cocoa exports had a marginally significant positive effect on GDP growth, while in the long run, cocoa export earnings showed a significant positive relationship with Nigeria’s GDP, with a 1% increase in cocoa export earnings leading to a 0.294% increase in GDP. The study highlights the need for policies that stabilise exchange rates and enhance cocoa production to realise the full potential of the cocoa sector. A key recommendation is for policymakers to prioritise the stabilization of cocoa prices and encourage sustainable farming practices.