The Impact of regulatory policy on the development of trade and industry

Abstract

The research investigates the impact of governance indices and regulatory policies on agricultural production inefficiency in Sierra Leone. The stochastic Frontier Approach is used to conduct the investigation using data from 1996 to 2021. The production function consists of four main inputs, land, capital, labor, and fertilizer usage. The inefficiency determinants are governance indices and regulatory policies that impact the growth of agribusinesses in Sierra Leone. The estimation results show that all the dimensions of governance in Sierra Leone are very low in terms of quality and hence have a negative effect on technical efficiency in agriculture production. Likewise, the specific government policies have not effectively addressed the problems of the agriculture sector hence a negative impact on technical efficiency. The main inputs are land, capital, and labor have positive and significant effects on agriculture production. However, fertilizer usage is found to have a negative effect maybe because in Sierra Leone it has been used beyond optimum levels or poor quality of institutions are resulting in misappropriation of the subsidized fertilizers. The results are found to be robust using an ARDL method. This study concludes that the government should put extra effort into improving government, building effective institutions, and implementing appropriate regulatory policies to grow the agribusiness industry in Sierra Leone.