Trade Openness and Economic Growth in Nigeria

Abstract

The study scrutinized the relationship existing between trade openness and economic growth in Nigeria by disaggregating trade openness into solid mineral export earnings, manufacturing export earnings, agricultural export earnings and oil export earnings. The study employed the Autoregressive Distributed Lag (ARDL) model covering data period from 1986 to 2020. Accordingly, the bound test result revealed that all four sectoral exports variables had long-run equilibrium relations with economic growth in Nigeria. In the short run, the study found that economic growth is significant and positively responsive to changes in agriculture and crude oil exports contrary to its significant and negative response to changes in solid mineral exports. However, manufacturing exports were found to be statistically insignificant in exerting impact on economic growth in the short run. In the long run, the study also found that agriculture and manufacturing exports had significant positive impact on growth while the effect of solid minerals and oil exports is negative and statistically significant. It is the recommendation of the paper that the federal government may consider a strategy of making all exports to go through export processing zones thereby adding more value to the exportables and creating demand for the products as well as more revenue for the government.