Reevaluating the linkage between trade openness and economic growth in Nigeria


Department of Economics, Faculty of Social Sciences, Delta State University, Abraka, Nigeria.
Research Article
World Journal of Advanced Research and Reviews, 2024, 22(03), 902–911
Article DOI10.30574/wjarr.2024.22.3.1744
Publication history: 
Received on 01May 2024; revised on 08 June 2024; accepted on 10 June 2024
This study reevaluated the linkage between trade openness and economic growth in Nigeria with data for the period of 1981 to 2022. The study employed Descriptive Statistics, Unit Root Test, Cointegration analysis, Regression Analysis (ARDL), Error Correction Model as the methods of analysis. The findings from the study showed that trade openness and external reserve impact positively and significantly on economic growth while exchange rate was found to be negative and significant. Also, findings from the error correction model showed that trade openness has a positive and insignificant impact on economic growth, external balance also has a positive significant impact on economic growth. Exchange rate on the other hand displays a negative insignificant impact on economic growth. The error correction term indicated that about 79 percent deviation in the previous year is corrected in the current year. The study therefore concluded that trade openness is a fundamental for economic growth in Nigeria and that external reserve crucial to funding of critical import necessary for domestic production. Furthermore, exchange rate of the naira showed that the economy will benefit more if the appropriate rate is prevalent in the market as this will make export to be attractive. A long run relationship was found among the variables used in the study. Based on the findings from the study we recommended that the government should engage more in international trade especially for key production inputs to boost domestic production. The government should also ensure that they maintain a healthy external reserve and ensure it is channel into the import of critical inputs. The true value of the exchange rate of the naira in relation to major currencies of the world should be targeted in order to make our exports attractive.
Trade Openness; Economic Growth; External Reserve; International Trade; Exchange Rate: Domestic Production
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