Impact of International Trade in Nigeria
AN EMPIRICAL ANALYSIS OF THE IMPACT OF TRADE ON ECONOMIC GROWTH IN NIGERIA
AN EMPIRICAL ANALYSIS OF THE IMPACT OF TRADE ON ECONOMIC GROWTH IN NIGERIA MIKE I. OBADAN
DEPARTMENT OF ECONOMICS AND STATISTICS UNIVERSITY OF BENIN BENIN CITY
AND OKOJIE, I. ELIZABETH
DEPARTMENT OF ECONOMICS AND STATISTICS UNIVERSITY OF BENIN BENIN CITY
ABSTRACT
Many economists generally agree that openness to international trade accelerates development. The relationship between trade and growth is envisaged through an export led growth strategy, following the theory that sustained trade is the main engine of economic growth. This paper examines the impact of trade on economic growth in Nigeria. Using time series data, a regression analysis was carried out using Microfit 4.1 econometric soft ware. Our results showed that trade openness positively impacted on Nigeria’s economic growth. Political instability had a strong negative impact on growth which reaffirms the very nature of our shaky nascent democracy. It is recommended that Nigeria should diversify her export base to include agricultural exports and solid minerals instead of depending solely on petroleum.
I.
INTRODUCTION Economists have long been interested in factors which cause different countries to grow at different rates and achieve different levels of wealth. One of such factors is trade. Nigeria is basically an open economy with international transactions constituting a significant proportion of her aggregate output. To a large extent, Nigeria’s economic development depends on the prospects of her export trade with other nations. Trade provides both foreign exchange earnings and market stimulus for accelerated economic growth.
1
JOS JOURNAL OF ECONOMICS, VOL.4, NO.1
Several countries have achieved growth through an export–led strategy. Small economies in particular have very little opportunity to achieve productivity and efficiency gains to support growth. Without tapping into larger markets through
AN EMPIRICAL ANALYSIS OF THE IMPACT OF TRADE ON ECONOMIC GROWTH IN NIGERIA MIKE I. OBADAN
DEPARTMENT OF ECONOMICS AND STATISTICS UNIVERSITY OF BENIN BENIN CITY
AND OKOJIE, I. ELIZABETH
DEPARTMENT OF ECONOMICS AND STATISTICS UNIVERSITY OF BENIN BENIN CITY
ABSTRACT
Many economists generally agree that openness to international trade accelerates development. The relationship between trade and growth is envisaged through an export led growth strategy, following the theory that sustained trade is the main engine of economic growth. This paper examines the impact of trade on economic growth in Nigeria. Using time series data, a regression analysis was carried out using Microfit 4.1 econometric soft ware. Our results showed that trade openness positively impacted on Nigeria’s economic growth. Political instability had a strong negative impact on growth which reaffirms the very nature of our shaky nascent democracy. It is recommended that Nigeria should diversify her export base to include agricultural exports and solid minerals instead of depending solely on petroleum.
I.
INTRODUCTION Economists have long been interested in factors which cause different countries to grow at different rates and achieve different levels of wealth. One of such factors is trade. Nigeria is basically an open economy with international transactions constituting a significant proportion of her aggregate output. To a large extent, Nigeria’s economic development depends on the prospects of her export trade with other nations. Trade provides both foreign exchange earnings and market stimulus for accelerated economic growth.
1
JOS JOURNAL OF ECONOMICS, VOL.4, NO.1
Several countries have achieved growth through an export–led strategy. Small economies in particular have very little opportunity to achieve productivity and efficiency gains to support growth. Without tapping into larger markets through