Abstract
The over-reliance on oil export revenue with little attention to non-oil export has subjected the Nigerian economy to recurring adverse external shocks which further aggravate the problem of balance of payment deficit in Nigeria. Therefore, study set out to examine the impact of non-oil exports on balance of payment disequilibrium in Nigeria. The data used for this study is secondary in nature and it spans from 1970 to 2018. The study employed econometric tools of ARDL Cointegration analysis and ARDL Error Correction Model to explore the long run relationship and the impact of non-oil exports on balance of payment disequilibrium respectively. The result of Wald bound test revealed that there is existence of co-movement between non-oil exports and balance of payment while long run ARDL Error Correction Model results showed that non-oil export has significant negative impact on balance of payment disequilibrium. In the same vein, inflation and interest rate also have negative impact on balance of payment disequilibrium but interest rate is insignificant. Findings from the study also exhibited positive relationship between exchange rate, trade openness and balance of payment. However, the positive impact of exchange rate on balance of payment is significant while that of trade openness is not significant. The study, thus concluded based on the findings that the non-oil export has not been contributing positively to improve the balance of payment position in Nigeria. In line with these findings, the study recommended that government should devise plans and strategies of boost the non-oil export sectors such as agricultural, manufacturing, solid minerals and service sectors in order to build virile and strong non-oil export sectors that can achieve favourable balance of payment. Moreover, the citizens of Nigeria should be motivated by one way or the others to have a taste for locally produced goods.
Highlights
Foreign trade is seen as an engine of growth in any economy across the globe
On the basis of the importance of export sector to the economy, this study finds its imperative to delve into the impact of non-oil export on the balance of payment disequilibrium in Nigeria
The beauty of this study is that this study used recent econometrics tools of ARDL cointegration and Error Correction Model to explore the impact of non-oil export on balance of payment disequilibrium
Summary
Foreign trade is seen as an engine of growth in any economy across the globe. There is a great deal of empirical evidence to suggest that it is impossible to understand the economic performance of a country without reference to their trading sector, that is, the performance of exports relative to the propensity to import. Balance of payment weakness in Nigeria is caused by low level of agricultural production, low level of technological development, inadequacies of import substitution and export promotion strategies, low inflow of foreign direct investment, large fiscal deficit, external debt amortization, etc (Obioma 2008). Nigeria export promotion Council (NEPC) which was set up in 1976 to increase nonoil export as means of diversifying Nigeria’s source of foreign exchange earning outlined the importance of non-oil export as a source of income to the economy which can be used to finance other economic sector of the nation; it creates employment opportunity for the populace and improve the well- being of the people. On the basis of the importance of export sector to the economy, this study finds its imperative to delve into the impact of non-oil export on the balance of payment disequilibrium in Nigeria
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