Nigeria’s Bilateral Trade in Goods and Services with Selected International Trading Partners

Abstract

Over the period, Nigeria’s major export commodities are agricultural goods, solid minerals, energy goods manufactured goods, crude oil and other oil products of which petroleum crude accounted for about 79% of total export while imports consisted of refined petroleum, raw materials, cars, agricultural goods, energy goods and other manufacture products. Using the augmented gravity model approach, this study analysed Nigeria’s bilateral trade in goods and services with selected international partners namely Belgium, China, France, India, Italy, Netherlands, South Africa, Spain, United Kingdom, and United States for the period 1995–2020. This study estimated the pooled ordinary least square and the fixed effect estimation in a balanced panel model. It was found that trade flow in Nigeria is positively and significantly determined by gross domestic product, population, and common colony in both models. The result further showed that distance negatively and significantly affects trade flow in Nigeria while relative price was positive and significant in the pooled effect model and negatively significant in the fixed effect model. Common language was positively significant in the pooled effect model but was statistically insignificant in the fixed effect model. Lastly, real effective exchange rate was not statistically significant in explaining bilateral trade flow in Nigeria within the study period in both models. Based on the results and the implications it holds, the study recommends amongst others, that policies aimed at diversifying the economy away from oil towards a technological, service and export driven economy should be earnestly pursued. This study further concludes that policy actions and human capital development programmes are therefore required to convert the teeming population into active and effective labour force which will in turn improve the gross domestic product and consequently improve trade flow