Foreign Trade and Nigerian Economy

Abstract

Globalization theoretically leads countries to increase their production and consumption levels and as well ensures prosperity in line with benefits accruable from foreign trade. Foreign trade has been adjudged by many a scholar as an engine with potentials to propel an economy to desired growth as it affords the opportunities to new products, to explore new techniques, to enhance communication and a considerable positive role in the business life. This study is an empirical reassessment of the impact of foreign trade on Nigerian economy with a time series data from 1981 to 2013. The regressors conformed to a priori expectations while export (EX) alone passed the test of significance. The F-test suggests that the joint influence of the explanatory variables is statistically significant and Jarque-Bera normality test also implies that the residual is normally distributed. The non-statistical significance of most of the variables points to the relatively weak diversified Nigerian economy with the dominance of the petroleum sector. Consequently, further opening of the economy needs to be halted else it will retard the growth of the economy. In order to promote growth and development, conscious efforts should be made in the formulation of policies to create enabling environment that will promote non-oil exports, ensure growth induced imports and promote the use of local raw materials.

Keywords: Foreign trade, Economic growth, Export, Import, Exchange rate, Policies