Acta Univ. Agric. Silvic. Mendelianae Brun. 2016, 64(6), 2161-2172 | DOI: 10.11118/actaun201664062161

The Heckscher-Ohlin Model and the Performance of Cocoa Products in Nigeria

Nahanga Verter
Faculty of Regional Development and International Studies, Mendel University in Brno, Zemìdìlská 1, 613 00 Brno, Czech Republic

The Heckscher-Ohlin model based on Ricardo's theory of comparative advantage maintains that countries should specialize in the production and exportation of products that they have relative factor endowments. Therefore, Nigeria has taken advantage of its favourable climatic condition to become among the largest producers and exporters of cocoa products in the world. Given that cocoa is also the topmost non-oil export product and earnings in Nigeria, this paper assesses its performance and determines the effects of external factors on production in the country. Nigeria's performance in the global cocoa market has been somewhat below expectations. Using OLS and Granger causality, the OLS regression results reveal that exports, trade openness, area harvested and domestic consumption have a positive influence on cocoa production in Nigeria. The Granger test shows that there exists bidirectional causality between the world price, trade openness and yield per hectare to cocoa production in the country. The results further confirmed a unidirectional causality running from cocoa output to exports. The government of Nigeria and trading partners should create a sound environment and some incentives to stimulate cocoa producers and exporters to increase production for export performance and revenue generation in the country.

Keywords: comparative advantage, export, H-O model, performance, processed, Nigeria
Grants and funding:

The author appreciates the financial support from IGA FRRMS MENDELU (No. 2016/012): 'Agricultural Production, Trade and Economic Growth in the Sub-Saharan African (SSA) Countries'.

Prepublished online: December 21, 2016; Published: January 1, 2017  Show citation

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Verter, N. (2016). The Heckscher-Ohlin Model and the Performance of Cocoa Products in Nigeria. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 64(6), 2161-2172. doi: 10.11118/actaun201664062161
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