Impact of International Trade on Economic Growth: The Nigerian Experience

Abstract

The study investigated the impact of international trade on economic growth in Nigeria: Annual time series data were obtained from the Central Bank of Nigeria Statistical Bulletin for the period 1981 to 2018 on the variables used for the study. Unit root test was conducted using Augmented Dickey-Fuller test technique and the result showed that the variables were stationary though at different levels. Co-integration test was also conducted using Johanssen co-integration test method and the result showed that the variables in the model were co-integrated meaning that the variables have a long run relationship. The regression result showed that export, import and exchange rate have a positive impact on the economic growth of Nigeria while trade openness has a negative impact on the economic growth of Nigeria The R-squared value showed that about 99 % of the total variations in the dependent variable were explained by changes in the explanatory variables The error correction result showed that the speed of adjustment to long run equilibrium is 65.9 percent when any past deviation must be corrected in the present period. The result of the granger causality test showed that there is a bi-directional relationship between export and economic growth , bi-directional relationship between import and economic growth, independent causality between exchange rate and economic growth and a bi-directional relationship between trade openness and economic growth Based on the findings it was recommended among others that government should encourage the importation of essential capital goods and discourage the excessive importation of consumable that their substitutes can be produced locally. Government should also encourage export diversification as non-oil exports should be encouraged while excessive dependence on oil exports should be discourage

Keywords: International trade, Import, Export, Economic growth.

DOI: 10.7176/EJBM/11-34-06

Publication date: December 31^st 2019