IMPACT OF NON-OIL FOREIGN TRADE ON ECONOMIC GROWTH IN NIGERIA

Abstract

This study probed the impact of non-oil foreign trade on economic growth of Nigeria within the period 1986 to 2018.The specific objectives of this research are to examine the impact of non-oil import on economic growth of Nigeria and the impact of non-oil export on economic growth in Nigeria. The study adopted the ex post facto research design. The data were sourced from Central Bank of Nigeria’s Statistical Bulletin. The study employed the Vector Error Correction Model (VECM) to investigate and analyze the long-run and short-run impact of non-oil foreign trade, proxy by non-oil export and non-oil import; on economic growth, proxy by gross domestic product (GDP). Findings revealed that in the long-run, increase in non-oil export and non-oil import will lead to decrease in the GDP. However, the VECM results indicate that, in the short-run, increase in non-oil import will lead to increase in the GDP, while increase in non-oil export in the short- run will lead to decrease in GDP. From the findings, this study concludes that non-oil import trade has a positive impact on GDP while non-oil export has a negative impact on GDP in Nigeria. This study recommends that Nigeria’s non-oil export should be heavily invested in non-oil high-earning productive sectors such as agriculture and mining. This will create a multiplier effect and increase the productive capacity of non-oil export for sustainable economic development in Nigeria. It is also recommended that non-oil import of Nigeria’s economy should be curtailed by making policies that will encourage import-substitution and enhance economic growth in Nigeria.