Abstract
Purpose of the study: The study aims is to examine the effect of trade openness on inflation rate in Nigeria.
 Methodology: Time series data were collected from secondary sources. EViews10 (statistical software for data analysis) ware employed to analyze the data collected.
 Findings: The results revealed a cointegrating and one-way Granger causality between inflation rate, and trade openness. In addition, both the short-run and the long-run results demonstrate a significant and negative relationship between inflation rate and trade openness in Nigeria.
 Application: The study is paramount to the government and policymakers in dealing and taking a decision regarding consumer price index and trade openness in Nigeria. We conclude that the government should work towards full diversification and diversion of the economy from oil export, control, and management of the degree of trade liberalization and the extent to which goods enter the country, and the control of money supplied.
 Novelty/Originality: The study accorded to debate on the inflation rate, and trade openness in Nigeria looking, at both short-run and long-run effects, before few accessible studies focused on impact, and trade openness was not measured as the value of net export divided by gross domestic product. Finally, the paper contributed to the scanty of the literature.
Highlights
The danger inherent in anchoring the growth prospects of an economy on a single product has long been established and for decades Nigeria has remained a mono-product economy with all her foreign exchange earning possibilities anchored only on oil revenue
Main Findings: This study found that the existing gender inequality has negative effect on the drive to diversify the economy by reducing the potential pool of human capital and promoting gaps in opportunities
Our study found that the quality of infrastructure is very important for economic diversification because its impact was significant in both long run and short run
Summary
The danger inherent in anchoring the growth prospects of an economy on a single product has long been established and for decades Nigeria has remained a mono-product economy with all her foreign exchange earning possibilities anchored only on oil revenue. Oil export revenue constitutes more than 90% of foreign exchange earnings and the oil sector persists as the driver of the mono-product Nigerian economy. This sector is the life-wire of the economy and drives policy formulation and implementation as budgeting is highly dependent on revenue from the sector. This over dependence on oil is a significant and contributory factor to the non-inclusive nature of the economy and has established the Dutch-disease syndrome in the Nigerian economy. The growth in Nigeria’s crude oil sector does not have positive spillover effects because of its poor linkages with other sectors of the economy
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