Trade Liberalisation and Imported Inputs in Nigeria: Gains or Losses?

Abstract

Nigeria, just like other nations exchange goods and services with different economies around the world. Tellingly, this exchange arose because countries discover that they do not have all the material resources they need; hence bilateral or multilateral engagement with regards to foreign purchase becomes unavoidable. This study investigated whether there was growth in the importation of indispensable raw materials in Nigeria, using annual data from 1970 to 2014 taken from the World Bank and the Central Bank of Nigeria. The annual time series were examined for unit root. To check for long run relationship, the Johansen cointegration test was applied. The study adopted Ordinary Least Squares (OLS) estimation technique and an error correction modelling (ECM) approach. Findings from the study indicate a statistically significant increase in the growth of raw materials importation both in the long run and short run. Therefore, the government is advised to remove any bottleneck that impedes the imports of invaluable raw materials required for local production. When this is sincerely done, productivity gains could be maximised.

Keywords: Trade Liberalisation, Imported Inputs, Raw Materials, Nigeria.