Openness, Government Size and Economic Growth in Nigeria

Abstract

This paper investigates the relationship among openness, government size and economic growth in Nigeria. The study employed the autoregressive distributed lag (ARDL) approach to cointegration to investigate the relationship among the variables. Empirical estimates revealed that in the long run, financial openness and trade openness had an insignificant negative effect on economic growth while physical capital and government size had significant positive and negative effect on economic growth, respectively. In the short run, financial openness, physical capital and government size had significant negative effects on economic growth while trade openness had significant positive effect on economic growth. The study concluded that openness and government size do not positively contribute to the country's economic growth performance which implies that efforts by the government at removing restrictions to trade and cross-border financial transactions, as well as increases in government size have not yielded the desired economic benefits.