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Trade Openness and Economic Growth in Nigeria

Ajayi E. O. AND Araoye F. E

Abstract

The paper examined the effect of trade openness on economic growth of Nigeria using data from 1970 to 2016. We used secondary data obtained from world development data base (2000), World Bank and International Financial Statistics, IFS- International Monetary Fund Data Base (2010) and Central Bank of Nigeria Statistical Bulletin 2014. Using the Augmented Dickey-Fuller (ADF) and Phillip-Peron (PP) unit root test, we discovered that all the series are non-stationary at levels. However taking the variables at first difference, results shows that all are I(1) at 5% for ADF and 1% for PP level of significance except the labour input which was not stationary at first difference in ADF. The findings from Co-integration test showed that an equilibrium relationship exists among the variables and using the Co- integration test in line with Engel and Granger (1987) which believed that there is a long-run relationship among economic variables if tested for unit root problem and since no problem is found which then conform with the claim of the study. Thus, all the coefficient were correctly signed and stationary at 5% level. Trade openness and economic growth depicted a positive relationship but a negative relationship existed between economic growth and exchange rate but this was expected especially for a country that engaged in international trade.

Keywords

Trade OpennessEconomicGrowthNigeriaWorld BankCentral Bank

References

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