Nexus between foreign trade and economic growth: The Nigerian Experience

This study investigates the relationship between foreign trade and economic growth in Nigeria. The objectives of the study are to; determine the effects of import growth rate, export growth rate, trade openness and exchange rate on Nigeria's economic growth. Using an ex-post facto research design and log-linear regression on secondary time-series data from 1985 to 2023, the study found that, import growth and export growth positively influence economic growth, with imports showing a stronger elasticity, indicating Nigeria's growth is largely import-driven. Trade openness was found to have a negative and significant impact on GDP, suggesting that high import dependency and limited export diversification expose the economy to external shocks. A positive relationship was observed between exchange rate and GDP, largely reflecting increased Naira earnings from dollar-denominated oil exports. The findings reveal that, despite the potential benefits of foreign trade, structural weaknesses, such as overdependence on crude oil, exchange rate volatility, and inefficient trade policies, undermine Nigeria's developmental gains. The study recommended amongst others, prioritizing export diversification beyond oil and strategically managing trade openness to promote economic growth.