Abstract
In Nigeria, despite the success of implementation of trade liberalization measures, and the persistent signs of economic recovery as seen from reduction in external debt and debt service payments, some macroeconomic pointers still showed poor performance of the overall economy and it is against this backdrop, that this study investigated effect of trade liberalization and trade inflows in Nigeria covering the period 1981-2018 with the help of the ARDL model of estimation. Based on the issues covered in the literature review, empirical investigations were carried out on the effect of trade liberalization and trade inflows in the Nigeria. Results showed that trade openness (TOP) had a negative relationship with economic growth in both the current year and in the long run. Similarly, import volume index (IMPVID) had a negative relationship with real gross domestic product (RGDP) for the current year and in the long run, while export volume index (EXPVID) had a positive impact on RGDP but was insignificant in the previous year’s lags. The result from the ARDL Bounds Test for co-integration test indicated evidence of long run relationship among the variables of interest while trade openness and RGDP had a non-directional causality between them. Based on these findings, the study recommended that government should encourage import liberalization through reduction in tariff rates, gradual removal of non-tariff barriers (NTB), outright banning of certain goods which will ensure that domestic imports, following trade liberalization, are directed mainly on intermediate and capital goods.
Highlights
IntroductionBackground to the study and Statement of the problem Over the years, trade was considered as an essential and motor of economic growth for nations which are at different levels of growth [1]
Export volume index (EXPVID) had a positive impact on real gross domestic product (RGDP) by increasing RGDP by 0.000150 units but its impact is insignificant at 5% level of significance as evidenced in the previous year lags in the short run but show a very weak insignificant impact on the growth of the Nigeria economy in long run and this finding is consistent with the work of [42], who used Granger causality and co-integration tests to investigate the relationship between export, domestic demand and economic growth in Nigeria
Trade openness has a negative relationship with economic growth in the current year at 5% level of significance in the short run and was an insignificant contributor to economic growth in the long run
Summary
Background to the study and Statement of the problem Over the years, trade was considered as an essential and motor of economic growth for nations which are at different levels of growth [1]. Trade does transform growth from one economy to other economies and contribute to better resource allocations. There has been a tremendous economic growth in some countries and a fluctuating economy in others and as a result there exists less evidence of convergences [2]. The fundamental objective was lowering tariffs significantly and other restrictions. Complement to this GATT was replaced by World Trade Organization (WTO) after the eighth ministerial conference of United Nations held in Uruguay.
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