Impact of International Trade on Economic Growth in Nigeria

Abstract

Using data from the World Development Indicator (WDI) and the Central Bank of Nigeria (CBN) Statistical Bulletin, this article analyzed the impact of exports, imports, the currency rate, and inflation on Nigeria’s economic development between 1981 and 2020. The research employed Autoregressive Distributed Lag (ARDL) bound testing methodology. The variables utilized in the study were evaluated for stationarity using the Augmented Dickey-Fuller and Philip Perron test, and the bound testing process was applied to the equations. The lag of variables test can be performed to determine the relationship between the variables. The outcome demonstrated that variables are stationary at first difference. Economy growth, exports and imports, exchange rate, and Inflation all exhibit long-term cointegration, as determined by a cointegration test. Export positively impacted on growth while inflation and exchange rate were found to be negatively affecting growth in Nigeria. The article indicates that there is a beneficial association between international commerce and economic growth and supports the policy of encouraging exports and expanding Nigeria’s presence on global markets.