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

This study examined the effects of trade liberalization andexchange rate changes on carbohydrate staples in Nigeria.Secondary data published from 1974 to 2006 on cassava exportsand rice imports as well as non-tradable carbohydrate stapleswere used. It was hypothesized that exchange rate changes andtrade liberalization via price relatives, trade intensity and nominalprotection coefficient have affected prices of carbohydrate staplesin Nigeria. Results show that the effects of trade liberalizationon prices of non tradable carbohydrate staples were mixed.Trade liberalization accounted for most changes in the price ofnon tradable rice than other crops. World prices positivelyaffected the prices of maize and non tradable rice. Also increasingexchange rate will lead to increase in price of non tradable ricedue to price competition with imported rice. The intensificationof liberalization exercise from the removal of quantitativerestriction to use of tariff, among other recommendations, shouldbe encouraged because it can be a remedy to the negativeimpact of increase in the trade intensity and erosion of nominalprotection coefficient on prices of the non tradable crops.