Interative effects of trade openness and foreign direct investment on economic growth in Nigeria

Abstract

The study examined the interactive effects of trade openness and foreign direct investment on economic growth in Nigeria over the period of 1982 to 2021. Specifically, the study sought to: determine the effects of trade openness on the economic growth in Nigeria and ascertain the effects of foreign direct investment on the economic growth in Nigeria. These variables consist of real gross domestic product (RGDP), Foreign Direct Investment (FDI), trade openness (TRAOPEN), inflation rate (INFLA), exchange rate (EXR) and trade tariff (TRADE). The variables used in the model were foreign direct investment (FDI), trade openness (TRAOPEN), and trade tariff (TRADE). The methods of data analysis was Autoregressive distributive lag Model. The following findings were stipulated; trade openness (TRAOPEN) has positive and significant impact on real gross domestic product (RGDP) its probability value of 0.0001 was less than 0.05 but it was positive and significant impact on real gross domestic product (RGDP) its probability value of 0.0027 was less than 0.05 in long run; foreign direct investment (FDI) has positive and significant impact on real gross domestic product (RGDP) its probability value of 0.0001 was less than 0.05 but it was positive and significant impact on real gross domestic product (RGDP) its probability value of 0.0027 was less than 0.05 in long run. The study recommends that policymakers of Nigeria government should consistently formulate and implement policies that would increase their annual inflows of FDI and their degree of trade openness.