Trade Liberalisation, Growth and Poverty Reduction in Nigeria

Abstract

This study traces the beneficial effects of trade-growth nexus and evaluates its indirect trend on the poverty periscope of the Nigerian economy (i.e the trickle-down theory of development), and in order to keep up with the ‘stationarity’ of the economic data employed, both individually and collectively, the Augmented Dickney Fuller (ADF), the Phillip Peron (PP) test, and the Johansen Juselius Cointegration tests were respectively employed. Contrary to expectation and in deviance to theoretical proposition, in the Nigerian context, an outward-oriented policy of trade liberalization has not been beneficial. This study, after all, lends more credence to the study of Kanayo, George and Adenuga (2004) which reports that there is no co-integration between trade openness and economic growth on the one hand, and with poverty reduction, on the other hand, both at 1 percent and 5percent significance levels. But, capital expenditure is the only variable that both impacts on growth and also trickles down to the ‘common man’ and thus reduces the poverty level of the Nigerian economy.

Keywords: Trade, Growth, Liberalisation, Poverty.

JEL CLASSIFICATION: O4, N7, I32