Globalization and Economic Growth: Empirical Evidence from Nigeria
GLOBALIZATION AND ECONOMIC GROWTH: EMPIRICAL EVIDENCE FROM NIGERIA
By
KELECHI IYOKO.
Abstract The concomitant unequal distribution of the benefits of Globalisation and the fear expressed by most developing countries about the negative impact of globalization, has made the question on the relationship between globalization (characterized by foreign direct investment, economy openness and net capital flows) and Economic Growth both in developed and developing countries lie at the heart of debates on economic development policy. This paper investigates the causal relationship between globalization (characterized by FDI and Openness) and Economic Growth using co-integration techniques on time series data in Nigeria. The result of the study shows a unidirectional causality between FDI and Growth with FDI Granger causing growth while there was no causality between Openness and Growth. Rather, openness Granger causes external debt in Nigeria. The study encouraged that the country should imbibe some of the sketched contours of an appropriate development strategies for developing economies which includes debt reduction, domestic fiscal discipline, effective exchange rate policy and the diversification of the domestic base.
Keywords: Globalization, Economic Growth, Granger causality, Nigeria.
INTRODUCTION Globalization and economic competitiveness remains one of the most controversial subjects in recent discourse. Several authors have critically examined its usage, ideological implications and economic benefits associated with it (Spybee, 1996; Scholte ,2000; Onyeonoru, 2003; Onyemenan, 2004; Eboreime and Iyoko 2008). Globalization which is characterized by an intensification of cross-border trade and increased financial and foreign direct investment flows promoted by rapid liberalization presupposes that globalization is beneficial to the extent that it can lead to increase in capital flows and economic growth. Yet the concomitant unequal
By
KELECHI IYOKO.
Abstract The concomitant unequal distribution of the benefits of Globalisation and the fear expressed by most developing countries about the negative impact of globalization, has made the question on the relationship between globalization (characterized by foreign direct investment, economy openness and net capital flows) and Economic Growth both in developed and developing countries lie at the heart of debates on economic development policy. This paper investigates the causal relationship between globalization (characterized by FDI and Openness) and Economic Growth using co-integration techniques on time series data in Nigeria. The result of the study shows a unidirectional causality between FDI and Growth with FDI Granger causing growth while there was no causality between Openness and Growth. Rather, openness Granger causes external debt in Nigeria. The study encouraged that the country should imbibe some of the sketched contours of an appropriate development strategies for developing economies which includes debt reduction, domestic fiscal discipline, effective exchange rate policy and the diversification of the domestic base.
Keywords: Globalization, Economic Growth, Granger causality, Nigeria.
INTRODUCTION Globalization and economic competitiveness remains one of the most controversial subjects in recent discourse. Several authors have critically examined its usage, ideological implications and economic benefits associated with it (Spybee, 1996; Scholte ,2000; Onyeonoru, 2003; Onyemenan, 2004; Eboreime and Iyoko 2008). Globalization which is characterized by an intensification of cross-border trade and increased financial and foreign direct investment flows promoted by rapid liberalization presupposes that globalization is beneficial to the extent that it can lead to increase in capital flows and economic growth. Yet the concomitant unequal
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