DISAGGREGATED EXPORTS AND ECONOMIC GROWTH IN NIGERIA: AN AUTOREGRESSIVE DISTRIBUTED LAG APPROACH

Abstract

Nigeria’s dwindling external reserves have constituted major threats to federally-collected revenue and citizens’ welfare. This paper examines the influence of disaggregated exports on economic growth in Nigeria, using the Autoregressive Distributed Lag (ARDL) approach. Adopting a longitudinal research design, and secondary data obtained from the Central Bank of Nigeria Statistical Bulletin (2015) as well as from the World Bank’s World Development Indicators, the paper utilizes annual time series data from 1981 – 2014. The paper tests the time series properties of the variables in order to confirm that no variable is I(2) before adopting the ARDL model. Economic growth is the dependent variable, which is proxied by Real Gross Domestic Product (RGDP) while results are tested at 5% level of significance. The paper establishes a long run relationship between RGDP and its selected determinants such as oil exports, non-oil exports, growth in labour force, capital formation, oil imports and non-oil imports while no short run causality is established among the variables. The restricted error correction model shows a low speed of convergence of output to its long run equilibrium as about 38.66 percent of the disequilibrium in the system is corrected within a year. The paper examines the long run elasticities and finds that oil exports do not significantly enhance economic growth while non-oil exports significantly hurt economic growth in Nigeria. Overall, the findings of this study cannot provide strong evidence to support the export-led hypothesis. Finally, the paper recommends, among others, that government should strengthen export-oriented policies; increase local refining capacity so that oil imports can be halted or minimized; enhance value-added non-oil exports; and adopt import-substitution strategy on consumer goods as these constitute the sine qua non for accelerating economic growth in Nigeria.

Keywords: Disaggregated Exports, Economic Growth, Unit Roots, ARDL.