IIARD International Institute of Academic Research and Development

INTERNATIONAL JOURNAL OF ECONOMICS AND FINANCIAL MANAGEMENT (IJEFM )

E-ISSN 2545-5966
P-ISSN 2695-1932
VOL. 4 NO. 2 2019

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Export Diversification and Economic Growth in Nigeria

Naomi Onyeje Doki (PhD) & Michael Yila Tyokohol

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Abstract

Economic literature is replete with theories and empirical studies that provide plenty evidence to support the argument that export diversification affects economic growth. The available evidence indicates that for high income countries, this relationship tends to follow an inverted U-curve pattern while for low income (developing) countries, it is mostly positive. For Nigeria, most previous studies simply made use of disaggregated sectoral exports as a measure of export diversification. More recently however, the Theil export diversification index which is a more appropriate measure of the degree of exports diversity has been developed by the IMF. This research was therefore carried out to verify the existence of a positive long-run relationship between export diversification and economic growth for the case of Nigeria, using the IMF Theil export diversification index. The study employed the Bounds Co-integration test and the Error Correction Model (ECM) under the Autoregressive Distributed Lags (ARDL) model framework and found that indeed, export diversification has positive, though insignificant effect on economic growth in Nigeria in the long and the short run. The relative insignificance is however attributed to the low level of diversity of exports at the moment; implying that greater diversity should see it have significant effects on growth. The study recommends that government’s diversification efforts should be intensified and channelled towards manufacturing and service exports which have the potential to fuel growth. This would sure help in growing the GDP Per Capita of the country until such a time when diversification is no longer beneficial and it becomes necessary for the country to re-specialize.

keywords:

Export Diversification, Economic Growth.

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