THE NEXUS BETWEEN INTERNATIONAL TRADE AND ECONOMIC GROWTH: THE NIGERIAN EXPERIENCE

Imoughele Lawrence Ehikioy, Ismaila Mohammed

Abstract


The main thrust of this study is to examine the impact of international trade on Nigeria economic growth.  The study employs empirical analysis in examining the effect of international trade variables (openness of the economy, volume of import, export, foreign direct investment and exchange rate) on Nigeria economic growth using time series data from 1985 to 2013.  The Augmented Dickey-Fuller (ADF) test was used for the unit root test and Johansen’s co-integration test was also conducted to establish short and long run relationships between economic growth and foreign trade variables. The result shows two co-integrating equations which establish the existence of long run relationship among the variables. The ordinary Least Square statistical technique was used to assess the degree of influence the variables have on each other. The results show that export, foreign direct investment and openness of the economy has direct and significant impact on  Nigeria economic growth also exchange rate has direct but insignificant impact on the nation economy while volume of import has inverse and insignificant impact on the Nigerian economy. From our findings, we therefore conclude that foreign trade variables of export, foreign direct investment and openness of the economy have the tendency to improve and sustained the nation economic performance and stabilised the country trade with other nations of the world. The study recommended among others that government should ensure that adequate macroeconomic policies that will open up the economy are put in place to encourage foreign direct investment inflow and expand Nigeria exportation of goods and services for the established international market in view of the fact that exports are driver of economic growth. 


Keywords


International Trade, Export, Import Openness of the Economy, Economic Growth, Foreign Exchange, Nigeria

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