Trade In Nigeria Research Articles

Analysing Nigeria’s Trade Policies: Evolution, Achievements, and Challenges

This paper examines the trajectory of Nigeria's trade policies from the pre-independence era to the present day, highlighting their benefits and challenges. Indeed, successive Nigerian governments have implemented various policies to reduce dependence on oil and gas, seeking to diversify the economy base. While noticeable gains have been recorded in the agricultural sector and domestic manufacturing capabilities, the need for improvement is equally not doubtful. There is the strong imperative for improvements in the value-chain of agriculture, enhancement of manufacturing capabilities and efficiency, and capital investments to boost the solid minerals sector. All of these are initiatives that must be considered if the country must develop pragmatic trade policies. The globalisation of trade has clearly shown that Nigeria must move beyond implementing trade policies that are protective of its domestic industries, but to adopt those that balance its economic growth and development objectives.

Trade Liberalization and the Performance of the Manufacturing Subsector in Nigeria

Trade liberalization is a widely accepted policy for fostering economic growth, particularly in developing countries. Advocates argue that open economies, through increased competition, specialization, and access to global markets, outperform closed economies. However, the short-term effects on developing economies like Nigeria remain debated, especially within the manufacturing sector. Nigeria's trade policy has fluctuated between protectionism and openness, significantly influencing its manufacturing performance. Critics, drawing from dependency theory, argue that liberalization exposes weaker economies to exploitation by stronger nations, leading to trade imbalances and inhibiting industrial growth. This study investigates the nonlinear effects of trade liberalization on Nigeria’s manufacturing sector, addressing a gap in the literature by employing a quadratic approach to determine threshold effects. By incorporating a quadratic form of the trade variable, the study tests the hypothesis that trade liberalization initially boosts the manufacturing sector but results in diminishing returns as openness intensifies. The research is framed within the Laffer Curve of Trade, suggesting that beyond a certain threshold, excessive openness may harm the manufacturing sector. The AutoRegressive Distributed Lag (ARDL) model is used to assess both short-run and long-run effects, with findings indicating a convex relationship between trade liberalization and manufacturing output, highlighting the critical importance of identifying optimal policy thresholds to maximize industrial growth.

The Relationship Between Cryptocurrencies and the Trade Balance of Nigeria

Bitcoin has increased rapidly in value since the first day of its integration into today's markets. The increases experienced have directed the interest of global investors to this field over time. In addition to these developments, the increasing popularity of blockchain technology and the increase in the volume of cryptocurrencies have turned these currencies into an important tool for commercial activities. Although there are many studies to measure the international trade balance with exchange rates, no study has been found to examine the relationship between the change in cryptocurrency prices and the trade balance of countries. In this study, the relationship between the trade balance of Nigeria, one of the leading countries in the world in terms of cryptocurrency usage, and cryptocurrencies is analysed using NARDL analysis with coefficient symmetry test (2016/M4-2020/ M12). According to the research results, Bitcoin and Litecoin can have significant long-term impact on Nigeria's trade balance.

Unraveling the relationship between trade openness, economic growth, and financial development in Nigeria

Purpose — This study examines the impact of trade liberalization and economic growth on financial development and suggests policies to enhance financial stability.Method — The study utilizes an Autoregressive Distributed Lag Model to analyze the presence of co-movement within the context of trade openness and economic growth on financial development in Nigeria. Additionally, the technique allows for a dynamic assessment of the short and long term.Result — Our findings for Nigeria spanning from 1990 to 2021 demonstrate a positive long-term relationship between trade openness and financial expansion, while economic growth has a negative short-term impact on financial expansion.Contribution — This study contributes to the frontier of knowledge by uncovering the interplay among Nigeria's trade openness, economic prosperity, and financial development, which has been overlooked. Additionally, it offers insights into the specific dynamics and mechanisms operating within the Nigerian context by scrutinizing relevant economic indicators.

The Determinants of Foreign-Direct-Investment (FDI) Inflows in Nigeria

ABSTRACT: Due to the importance of foreign direct investment (FDI), scholars are always keen to explore FDI determinants and analyze their implications. Nevertheless scholars have proposed mixed viewpoints of FDI and interpreted its determinants differently, which do not contribute to the knowledge advancement and amalgamation of FDI literatures. The current research, therefore, aims to advance the knowledge of FDI determinants in Nigeria through a new investigation on the key determinant factors affecting Nigeria's inward FDI. Data were collected from UNCTAD (1970-2014) and analyzed by auto-regressive distributed lag tests (ARDL). A comprehensive theory-based model was developed accounting for many variables, such as the interest rate, external debt, oil rents, the Gross Domestic Product (GDP) growth rate, trade and exchange rate volatility. The analysis of FDI determinants in the Nigerian economy yielded reliable, robust, and economically meaningful results thereby offering an insight into the driving factors of inward FDI. Findings indicate that the interest rate, external debt, oil rents, and GDP growth are all important determinants, possessing a long-run effect on FDI. Different from the literature, however, trade and exchange rate volatility are barely important to FDI. Several policy implications flow from the findings. From a policy point of view, regarding the GDP growth rate, there should be concerted efforts to boost the performance of the non-oil sector in Nigeria through more investments in the agricultural and industrial sectors making the growth of the economy spread across other sectors and, in turn, encouraging inward FDI in such areas. Countries such as Nigeria, endowed with natural resources, should pursue policies targeted at full deregulation (privatisation) of their natural resource sector to better utilize the abundance of their natural resources thereby attracting additional FDI. Nigeria should also pursue better debt management practices. When debts are acquired, they should be targeted towards future consumption and longer-term investments. Most importantly, as an import-dependent economy, the Nigerian government should also formulate export-driven and appropriate fiscal policies that will stabilize Nigeria's trade relationship with other world economies. The Nigerian government should create the necessary environment that will regulate macroeconomic and specifically monetary policy (interest rate) which is essential for the attraction of FDI inflows into the economy. Finally, Nigeria should ensure that the quality of exportable commodities is improved to enhance international competitiveness.

Trade Openness, Government Regulations, and Economic Growth: The Nigeria Experience

Trade openness as an indicator of growth in the Nigerian economy has caused grave concern among all stakeholders in the economy and the global business community at large. Nigeria's trade openness, governance, and economic growth were examined using quarterly time series data from 1996Q1 to 2021Q1. The study emphasised the role of governance in promoting long-term growth in Nigeria through trade openness. In this study, governance is proxied by three variants of good governance indicators: corruption control, rule of law, and government effectiveness, while the exchange rate was used as a control variable. The hypothesis was tested using the in autoregressive distributive lagged technique due to the mixed stationarity condition of the series. The estimated result revealed that trade openness is a negative predictor of economic growth and that government effectiveness promotes economic growth in the short run while control of corruption improves economic growth amidst a decreasing impulse generated by the rule of law in the long run. The study concludes that trade openness causes a reduction in economic growth in Nigeria while governance has a mixed effect on economic growth. Therefore, the study recommends that the government should enhance trade openness value and ranking through the export of capital-intensive commodities. Also, institutional efficiency should be enshrined Nigeria.

Fiscal Policy, Monetary Policy, and Trade Balance Nexus in Nigeria: A New Empirical Evidence

Today fiscal and monetary policy instruments are inextricably linked in macroeconomic management as the macroeconomic variables are interwoven. The broad objective is to analyze the impact of fiscal and monetary policy instruments on the trade balance in Nigeria. This study uses the cointegration method and ordinary least square estimation to examine the impact of fiscal and monetary policy on Nigeria's trade balance from 1981 to 2018. The co-integration test confirms the existence of a long-run relationship between monetary policy as measured by broad money supply and fiscal policy as measured by government spending, taxation, and trade balance. The empirical findings revealed that the selected monetary and fiscal policy variables did not improve Nigeria's trade balance during the study period. As a result, the study recommended that the government encourage trade policies that increase exports to attract foreign exchange inflows and foreign investments.

Oil Price, Exchange Rate and Asymmetric Adjustment of Nigeria's Bilateral Trade

Motivated by the persistent rise in bilateral trade imbalance in Nigeria, this paper empirically examines whether Nigeria's four trading partners (China, India, the UK and the US) respond asymmetrically to changes in the oil price and exchange rate using a nonlinear autoregressive distributed lag model over the period from January 1999 to December 2019. Interestingly, we find that oil price increase and decrease influence Nigeria's trade balance with four trading partners asymmetrically. Further evidence indicates that oil price increases predominantly exert greater influence than decreases. Furthermore, Nigeria's trade balances with India and the UK in the long run and the US in the short run significantly respond asymmetrically to changes in exchange rate. In addition the result establishes significant evidence of the J-curve pattern in the response of Nigeria's trade balance with the UK to differences in exchange rate.

Symmetric or asymmetric: how is Nigeria's bilateral trade balance responding to oil price and exchange rate changes?

PurposeThe experience of rising trade imbalance between Nigeria and its key trading partners in recent years motivated this study. Previous studies on this issue either ignored bilateral level or assumed that the effect of crude oil price and/or exchange rate changes on trade balance is symmetric. Consequently, this study investigates whether Nigeria's bilateral trade balance with Belgium, China, United Kingdom (UK) and USA is responding symmetrically or asymmetrically to changes in oil price and exchange rate.Design/methodology/approachThe authors used nonlinear autoregressive-distributed lag (NARDL) model that decomposed oil price and exchange rate into partial sum processes of positive and negative changes over the period 1999Q1–2019Q4.FindingsThe study finds that the effects of oil price hike and plunge asymmetrically influence Nigeria's trade balance with the UK and USA. Further evidence indicated that oil price plunge exerts greater influence than price hike in all the cases, except the UK in the long run. Furthermore, Nigeria's trade balance responds asymmetrically and significantly to changes in exchange rate with China in the long run and with China and the UK in the short run. Specifically, the depreciation effect is more prominent than appreciation.Originality/valueSignificant contributions to the existing literature in Nigeria include the recognition that the effects of oil price and exchange rate changes on trade are asymmetric and the disaggregation of trade into bilateral level to identify country-specific effect.

EFFECT OF VOLATILITY IN THE NAIRA - DOLLAR EXCHANGE RATE ON THE VOLUME OF IMPORTS TO, AND EXPORTS FROM NIGERIA

We analyzed the effect of volatility in the Naira-Dollar exchange rate on the volume of imports to and exports from Nigeria between 1990 and 2019. Data for all variables, except volatility, were sourced from the Central Bank of Nigeria (CBN), the National Bureau of Statistics (NBS), and the International Financial Statistics. The volatility of the naira exchange rate was calculated from the model. The study employed both the autoregressive distributed lagged (ARDL) and exponential generalized autoregressive conditional heteroscedasticity (EGARCH) models to test for the short and long-run relationships between changes in the Naira-Dollar exchange rate and the volume of imports and exports. Volatility in the Naira-Dollar exchange rate was found to be related to the volume of imports to and exports from Nigeria in the long run with no short-run effects because of the pass-through effect to domestic inflation. The study recommends that government should sustain efforts at promoting exports and reducing imports to improve the trade balance. The study brings into perspective another way of looking at the long-run relationship between the Naira-Dollar exchange rate and Nigeria's trade balance.Keywords: Foreign exchange rate, foreign exchange market, Imports, Exports, The balance of trade, Nigeria.JEL Classifications: F14, F31, 024.DOI: https://doi.org/10.32479/ijefi.11799

Monetary Policy and Nigeria's Trade Balance, 1980-2018

Several countries have integrated monetary easement into their foreign policy to faucet the gains from trade thereby, assuring that market forces determine monetary policy instruments such as interest rate and exchange rate. It is on this note and this paper empirically evaluate the effect of monetary policy on Nigeria's trade balance using the Autoregressive Distributed Lag Model on the time series data spanning from 1980 to 2018. The findings reveal that monetary policy tools of real interest and effective exchange rate have a long-run co-integration relationship and significant adverse effects on Nigeria's trade balance both in the short-run and long-run. Thus, the paper concludes that monetary policy is a veritable tool through which Nigeria can maintain a favorable trade balance. Therefore, policymakers should step on measures that will maintain low-interest rates to sustain a flexible exchange rate and remove all rigidities associated with the international payment system.JEL Classification: C22, E52, F13How to Cite:Sakanko, M. A., & Akims, K. A. (2021). Monetary Policy and Nigeria’s Trade Balance, 1980-2018. Signifikan: Jurnal Ilmu Ekonomi, 10(1), 129-138. https://doi.org/10.15408/sjie.v10i1.18132.

AN EXAMINATION OF RECENT TRENDS, COMPOSITION AND TRADE INTENSITY OF NIGERIA-BRAZIL BILATERAL RELATIONS

This paper examines the trends, composition and trade intensity of Nigeria-Brazil bilateral trade relations for the period 2000-2017. Tables, graphs, and trade intensity index were employed. The results indicate that Nigeria's trade with Brazil has significantly recorded impressive growth. However, the share of major products exported to Brazil over the period remained insignificant with the exception of mineral fuels. The results further show that the share of major products imported from Brazil is significant, indicating that Brazilian exports to Nigeria are more diversified than that of Nigeria's export to Brazil. The trade intensity index indicates high trade intensities between the countries and the high possibility of increasing bilateral trade flow. Based on these findings, the study recommends the need for Nigeria’s export to be restructured in order to reduce the prevailing role of mineral fuels to Nigeria's exports through diversification and identification of new export opportunities in Brazilian markets.

Nigeria's Trade Complementarity and Similarity with West African Sub-Region

This study analyzed Nigeria’s trade complementarity and similarity with West African sub-region using trade intensity index and revealed comparative advantage index for the period 2000-2014. Exports and imports of Nigeria and ECOWAS and their twenty major products categories were analyzed. The result of the study shows that Nigeria and ECOWAS trade is importance given their exports and imports relative importance in the world trade. Easy access to sub-regional markets have significantly contributed to a great extent toward their high trade intensity within the sub-region. Nigeria’s trade intensities with West African countries are high more especially with countries like Benin, Cote d’Ivoire, Ghana, Senegal and Togo. Evidence from the trade indices shows that Nigeria can export cocoa, mineral fuels, rubber and raw hides and skins to countries with low RCA in these products. Because of limited industrial base, Nigeria and ECOWAS have no comparative advantage in the production and exportation of products such as articles of iron and steel, nuclear reactors, electrical machinery and equipment and furniture and have to import these products from non ECOWAS member countries. This also goes with the notion that Nigeria and ECOWAS are primary producers with little or no benefits from world trade. As a result of this fact there is a need for the countries within the sub region to change their production structure in order to encourage more trade among them, through the development of sound policies that will lead to grow of small scale manufacturing industries.

Gravity model by panel data approach: empirical evidence from Nigeria

Gravity trade model continues to be coveted for analysis of determinants of trade flows despite its lack of theoretical foundations. The main aim of the paper is to assess the determinants of the flow of Nigeria's exports using longitudinal data from 1999 to 2012. Extrapolating from the empirical literature, the paper constructs Nigeria's gravity trade model comprising nine EU countries, BRICS countries, Canada, Japan and the USA. Results from POOL and panel regressions - fixed and random effects show that market size and price index of destination countries positively drive trade flows in Nigeria, while relative factor endowment, economic similarities and geographical distance negatively affect Nigeria's trade flows. Furthermore, the paper found evidence in support of positive trade flows with the EU countries and negative trade flows with the BRICS countries and on account of cultural differences. Findings show that Nigeria's exports follow Linder hypothesis. These have important implications for economic, socio–cultural and bilateral trade negotiations for better trade performance in Nigeria in the future.

Impact of Trade Reform on Nigeria's Trade Flows

This study examines the impact of trade liberalization on Nigeria's trade flow. It covers the period from 1973 to 2006 and employs the Ordinary Least Squares (OLS) and Generalized Method of Moment (GMM) techniques. Results reveal among other findings that all categories of export except oil perform better during the trade liberalization period than before the trade liberalization period. Further analysis suggests that while the impact is significant enough to produce positive growth of manufactured exports, it is not so in the case of agricultural and aggregate non-oil exports. The results indicate that all categories of import experience improved performance during trade liberalization compared to the pre-liberalization period. However, the result suggests that in most cases the impact is not strong enough to turn the mean growth of imports positive. The study concludes that trade liberalization has not produced an impact that is significant enough to boost Nigeria's trade flows.

An evaluation of the impact of Nigeria's trade and investment policy reforms

An evaluation of the impact of Nigeria's trade and investment policy reforms

Evolving An Effective Trade Policy Against Agricultural Subsidies Of Developed Countries: An Analysis Of Nigeria's Trade Policy

Global trade as presently structured is skewed in favour of developed countries. This is as a result of a number of factors, one of which is agricultural subsidies. It is an amount paid by government to upset part of the production cost or in exporting of a product. This makes it possible for farmers in developed countries to dispose of their products at artificially low prices. The response of developing countries to this trend has been a weak and uncoordinated trade policy. They have been unable to effectively curtail the onslaught of dumping. This paper is an analysis of Nigeria's trade policy in tackling the issue of agricultural subsidies. This took the form of an in-depth assessment of the impact of agricultural subsidies, drawing from the experiences of other African countries and qualitative analysis of Nigeria's present trade policy. This revealed a lack of coordination and misplaced priorities in dealing with trade issues. A mixed strategy is suggested, that is done within the framework of a comprehensive and integrated development policy, emphasizing the importance of trade negotiations. Keywords: Trade policy, Agricultural subsidiesJOAFSS Vol. 4 (1) 2006: pp. 9-21

Taux de change réels et échanges régionaux en Afrique de l'Ouest : une analyse en équilibre général des relations Nigeria-Niger

Real Exchange Rates and Regional Economie Linkages in West Africa : A CGE Analysis of Nigeria and Niger Nigeria and its neighbor to the north, Niger, share a porous border over which substantial values of livestock, food products, textiles and small manufactures are traded in a parallel market. For Niger, the effects of the 1994 nominal devaluation and real depreciation of the CFA franc, the common convertible currency of Niger and the CFA franc zone, are complicated by simultaneous changes in Nigeria's trade and exchange rate policies. This paper examines historical movements in the real exchange rates of Nigeria and Niger and links CGE (computable general equilibrium) models of the two economies to simulate the impacts of policy reforms on economic output and income distribution. Simulations of an oil price shock, alternative exchange rate policies in Nigeria and a real depreciation of the CFA franc illustrate the importance of these policies for cross-border trade, real exchange rates on parallel markets, and real incomes of households, particularly in Niger.