International Trade and Economic Growth in Nigeria: 1986 - 2019

Abstract

The paper sought to test the impact of international trade on economic growth in Nigeria. The research adopted the causal research design. Time series data sourced from the Central Bank of Nigeria Statistical Bulletin from 1986 to 2019 were used to determine the impact of international trade on economic growth in Nigeria. Economic growth was proxied by Gross Domestic Product while international trade was proxied by trade openness, export, and exchange rate as a moderator. Trend analysis was employed in the analysis and the hypothesis was tested at 5% level of significance. To get a more robust estimate of the effects of the independent variables on the dependent variable, the log of the variables were taken. The unit root test result showed that the log of Gross Domestic Product (GDP), Trade Openness (TOP) and were stationary at level while the log of Exchange Rate (EXCHR) and Export (XP) were stationary at first difference. Consequently, we applied the ARDL model in the analysis. The results showed that Exchange rate and trade openness had negative and significant impact on economic growth while export had positive and significant impact on growth. Nigeria could gain more from international trade if the economy and the production structures becomes responsive and more adaptable to changes both internally and externally on the basis of international economic system. In ever changing and highly competitive global environment, Nigeria needs to continually re-examine, revise and re-evaluate sources of strengths, weaknesses, opportunities and threats (SWOT analysis) in order to develop appropriate policy strategies, that can lead to maximum national benefits from international trade.