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. 5 NO. 2 2020

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Impact of International Trade on Nigerian Economic Growth: Evidence from Oil Terms of Trade

Obisike, Ndubueze Ezindu, Onwuka, Irene Nkechi, Okoli, Uju Victoria AND Udeze, R. Chike

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Abstract

Nigeria is not just richly endowed in primary oil (crude oil), but one of the major exporters of the same. However, the nation is also one of the key importers of refined/manufactured oil produce. Thus, the nation is known for her strong engagement in international trade via export and import of crude oil and refined/manufactured respectively. Theoretically, whereas Hechscher-Ohlin posit that international trade promotes economic growth if nations should produce and export goods in which they have factor endowment advantage and take the reserve on import, Prebisch-Singer maintained that exportation of primary product and importation of refined/manufactured produce will lead to negative terms of trade in developing countries which in turn will lead to perpetual underdevelopment. Given the aforesaid, this study examined the impact of international trade on Nigeria’s economic growth drawing evidence from oil terms of trade from 2000 to 2018. The study made use of secondary data and employed Ordinary Least Square (OLS) regression technique. The estimated result revealed that in the short run, the oil commodity terms of trade (OCTOT) and non-oil commodity terms of trade (NOCTOT) had positive impact on Nigeria’s economic growth, well the granger causality test shows that OCTOT, NOCTOT and GDP are independent of each other. From the results, the study therefore concludes that international trade both in oil and non-oil are vital for economic growth in Nigeria and thereafter recommends that Nigerian government should promote not only the oil sector but the non oil sector as well

keywords:

GDP; OLS; OCTOT; NOCTOT

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