Impact of International Trade on Economic Growth in Nigeria

Abstract

This study investigates the impact of international trade on Nigeria's economic growth spanning from 1981 to 2019, using the Autoregressive Distributive lag (ARDL) approach to evaluate the connection between international trade and the economic growth of Nigeria. A long-run equilibrating link between all of the variables was verified by the ARDL bound test approach and the model contained three long-run vectors. Further, the model results of the short-run and long-run estimations indicate that import trade and foreign direct investment and the exchange rate have a negative and insignificant impact on economic growth in Nigeria; whilst export trade established a direct and significant impact on Nigeria's economic growth over the study period. The study revealed that international trade had an insignificant impact on Nigeria's economic growth during the study period under review. The study, suggests that the government should encourage the export of goods and services while discouraging imports by granting subsidies and tax concessions to local producers.  Furthermore, FDI should be enhanced by dealing with the instability of the polity (unrest, Boko haram, kidnapping etc.) by running an inclusive government that accommodates our individualities and realities while making conscious efforts in providing friendly foreign trade policies that would enhance more export and curtail import which is now a burden to the Nigerian economy. Lastly, a viable exchange rate regime should be put in place to achieve a double-digit exchange rate for our currency, all to expand and energize the country's international trade which contributes to the growth of the economy.